The Globe and Mail de ce matin In a separate research report, Ms. Nattel reaffirmed her “constructive” view of Alimentation Couche-Tard Inc. (
) ahead of the Nov. 23 release of its second-quarter 2022 results.
“Tweaking forecasts and target ahead of FQ2 results to reflect strong industry fuel margins in the period and expectations around sustainability at higher levels, more than offsetting slow volume recovery as work from home continues to impact miles driven,” she said. “We reiterate our view that the current environment is likely to drive a deeper wedge between industry leaders and small-chain operators and accelerate industry consolidation of which ATD is a key beneficiary.”
“Underpinned by strong industry fuel margins, ongoing strength in inside store performance, contribution of Circle K HK, and translation tailwind of weaker USD, partly offset by higher opex, notably the impact of rising gas prices on credit card fees,” Ms. Nattel is now forecasting earnings per share for the quarter of 69 cents, up 21 per cent from her previous estimate and 4 per cent higher than the result during the same period a year ago.
“Our revised FQ2 estimate is above the mid-point of forecast range $0.58-$0.75,” she said. “Looking further ahead, we remain highly constructive on the outlook, with meaningful earnings torque from the Circle K re-branding and deployment of Fresh Food, Fast.”
Her target for Couche-Tard shares rose to $73 from $65 with an “outperform” rating. The average on the Street is $58.54.
“In our view, current valuation presents a compelling opportunity, with shares trading below the midpoint of the 7-year range despite solid underlying performance trends, strong FCF across cycles, a clean balance sheet, and opportunity for strategic M&A,” said Ms. Nattel.