Alimentation Couche-Tard (TSX:ATD) is a comfort retailer operator that operates over 16,700 shops throughout 28 international locations, with round 13,100 providing street transportation gasoline. After delivering over 32% returns final yr, ATD inventory has continued its uptrend and is buying and selling over 8% increased this yr. Its strong quarterly performances, retailer community enlargement via acquisitions, and wholesome development prospects have boosted its inventory value. With the corporate buying and selling near its all-time excessive, let’s assess whether or not it affords any shopping for alternatives.

Let’s have a look at its efficiency within the lately reported second-quarter earnings of fiscal 2024 that ended on October 15.

ATD’s second-quarter earnings

Within the second quarter of fiscal 2024, ATD generated $16.4 billion of income, a 2.7% decline from the earlier yr. The decline within the common gasoline promoting value and decrease quantity amid weaker demand and alter in its enterprise mannequin weighed on its topline. Apart from, the corporate’s same-store gross sales declined by 0.1% in america and 0.2% in Europe and different areas as a result of decrease disposable revenue and weak cigarette gross sales. Nonetheless, its gross income rose 2.7% to $2.9 billion amid contributions from acquisitions, increased merchandise and repair gross margins, and elevated gasoline gross margins.

Apart from, the corporate has generated an adjusted EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) of $1.5 billion, a 1.9% improve from the earlier yr. The contributions from acquisitions, natural development from its shops, and beneficial foreign money translations boosted its adjusted EBITDA. Its web revenue was $819.2 million, a 1.1% improve from the earlier yr’s quarter. The adjusted EPS stood at $0.82, consistent with final yr’s quarter.

Now, let’s have a look at its development prospects.

ATD’s development prospects

In the meantime, ATD is progressing with its “10 For The Win,” a five-year technique to develop its adjusted EBITDA from $5.8 billion in fiscal 2023 to $10 billion by 2028. Final month, it acquired European retail property from TotalEnergies, which incorporates 2,175 websites throughout Germany, Belgium, the Netherlands, and Luxembourg. Apart from, the corporate is continuous its different acquisitions and improvement of recent shops, which might increase its financials within the coming quarters. Of the deliberate 500-store development by 2028, it has accomplished the development of 40 shops within the first two quarters of fiscal 2024.

With the extremely fragmented United States retail market, ATD is well-positioned to strengthen its place, given its scale, optimized provide chain, and efficient improvement of private-label manufacturers. So, the corporate’s development prospects look wholesome.

Buyers’ takeaway

In January, the Shopper Worth Index in america rose 3.1%, increased than analysts’ projection of two.9%. With inflation persevering with to stay increased, the Federal Reserve won’t rush for fee cuts. Analysts predict that world financial development will decelerate this yr amid the impression of financial tightening initiatives. So, I imagine the fairness markets will stay unstable within the close to time period.

Given the important nature of its enterprise and aggressive enlargement, I imagine ATD will proceed to drive its financials regardless of the difficult setting. Apart from, it has additionally raised its dividend 10 occasions during the last 10 years at a CAGR (compound annual development fee) of 27%, which is encouraging. The corporate’s valuation additionally seems cheap, with its NTM (subsequent 12 months) price-to-earnings a number of at 18.7. Contemplating all these components, I’m bullish on ATD.