Alimentation Couche-Tard updated March 20, 2018

Alimentation Couche-Tard is updated and rated Buy at $59.60.

The stock dropped 6.5% today after it released earnings that “missed analyst expectations”. I would say it is more accurate to say that its earnings came in lower than analysts incorrect forecast. Lower gasoline margins (they tend to be volatile) and some higher expenses associated with acquisitions led to the lower adjusted earnings. I don’t think anything in its growth story has changed. Adjusted earnings per share were up only 1% this quarter but had risen 38% in the prior quarter.

Due to acquisitions, revenues are through the roof. I believe that on a run-rate basis this is now easily the largest company by revenue in Canada. That won’t show up in the rankings this Spring which will use Couche-Tard’s figures from its fiscal year ended April 2017 (old news). But revenue is way up since then.

The stock is reasonably priced but is not a screaming buy. I would add to positions on dips and I did so today. Earnings per share could rise substantially in the next year as it digests its latest acquisitions.