Summary
- Alimentation Couche-Tard (ATD:CA) upgraded to buy as Q2 results show robust merchandise growth, stabilized fuel margins, and resumed capital returns.
- ATD:CA’s food program is driving sequential meal deal sales growth and higher-margin merchandise attach…
Summary
- Alimentation Couche-Tard (ATD:CA) upgraded to buy as Q2 results show robust merchandise growth, stabilized fuel margins, and resumed capital returns.
- ATD:CA’s food program is driving sequential meal deal sales growth and higher-margin merchandise attachment, fueling same-store sales and gross margin expansion.
- Fuel margins have proven resilient, cost discipline is strong, and capital returns are accelerating with share repurchases and a raised dividend.
Luis Alvarez/DigitalVision via Getty Images
Investment action
I had a hold rating for Alimentation Couche-Tard Inc. (ATD:CA) previously, as I thought the overall weakness in fuel volumes and margins was still a big concern that weighed on the
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Quick Insights
Stronger merchandise growth, stable fuel margins, accelerating food program adoption, cost discipline, and resumed capital returns underpin the positive outlook and rating upgrade.
The food program is driving double-digit sequential meal deal sales growth, boosting transaction counts, and expanding US gross margins by 90 bps to 34.7%.
Regulatory headwinds in nicotine and operational complexity from food expansion could pressure merchandise performance and margins if negative impacts intensify or execution falters.