On Thursday, Stifel reaffirmed its Buy rating on shares of Alimentation Couche-Tard Inc (ATD/B:CN) (OTC: ANCUF), with a steady price target of Cdn$89.00.
The convenience store operator reported its third-quarter fiscal year 2024 earnings, which revealed an adjusted earnings per share (EPS) of $0.65. This figure represents a 12% decrease year-over-year and falls short of the anticipated $0.84 EPS projected by analysts.
The company's earnings were impacted by several factors, including lower-than-anticipated fuel margins in both the U.S. and Europe, which contributed to a shortfall of $0.06/share and $0.05/share respectively.
Additional discrepancies stemmed from increased amortization expenses amounting to $0.04/share and a dip in merchandise gross margins in the U.S. by $0.02/share.
Alimentation Couche-Tard also disclosed a decline in same-store sales growth for merchandise across all three reported regions, marking a first in over a decade. The downturn is attributed to subdued discretionary spending, which has led to weaker consumer traffic, coupled with a continued decrease in cigarette sales.
Despite the downturn, Couche-Tard's performance in the U.S. was relatively stronger compared to its competitor, 7-Eleven.
Couche-Tard experienced a merchandise same-store sales decline of 1.5%, which was less severe than 7-Eleven's 2.7% drop for the same period. The comparison suggests that the observed weakness might be a broader industry issue rather than company-specific.
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