For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Alimentation Couche-Tard Inc.'s (TSE:ATD.B) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
How Did ATD.B's Recent Performance Stack Up Against Its Past?
ATD.B's trailing twelve-month earnings (from 21 July 2019) of US$1.9b has increased by 8.9% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which ATD.B is growing has slowed down. Why could this be happening? Well, let's examine what's going on with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Alimentation Couche-Tard has fallen short of achieving a 20% return on equity (ROE), recording 20% instead. However, its return on assets (ROA) of 8.8% exceeds the CA Consumer Retailing industry of 4.8%, indicating Alimentation Couche-Tard has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Alimentation Couche-Tard’s debt level, has declined over the past 3 years from 17% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 61% to 70% over the past 5 years.
What does this mean?
Alimentation Couche-Tard's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Alimentation Couche-Tard has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Alimentation Couche-Tard to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ATD.B’s future growth? Take a look at our free research report of analyst consensus for ATD.B’s outlook.
- Financial Health: Are ATD.B’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 21 July 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.