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Price: CA$80.24
Discount category: Well below intrinsic value
Next earnings: 2026-11-24
Next earnings is estimate: Yes
Company name: Alimentation Couche-Tard
Sector: Convenience stores & fuel
About: Alimentation Couche-Tard runs convenience stores and fuel stations in North America, Europe and other regions, mostly under the Circle K and Couche-Tard brands. It earns money from merchandise and food sales and from road transportation fuel. The United States is its largest market. Revenue was $76.5 billion in fiscal 2026, which ended on April 26, 2026. The company reports in U.S. dollars, and its shares trade on the Toronto Stock Exchange in Canadian dollars. It is based in Laval, Quebec.
Thesis: The market prices Couche-Tard for the risk that high U.S. fuel margins fall and for slow growth in store sales. U.S. fuel margins were 52.61 cents per gallon in Q1 fiscal 2027, up 8.61 cents from a year earlier, while U.S. same-store fuel volumes fell 1.6%. Same-store merchandise sales grew only 1.7% in the U.S. and were flat in Canada, where tobacco sales are weak. The company also plans to buy Żabka in Poland for about $8.6 billion, which raises net debt to about 3.0 times adjusted EBITDA at closing. All amounts are in U.S. dollars. For the gap to close, three things must be true. U.S. fuel margins must stay near present levels or fall only slowly. Same-store merchandise sales must keep growing. The Żabka deal must close, add to EPS by the second year and let leverage return to the company's framework. The Q2 fiscal 2027 report, expected in late November 2026, and the Żabka closing, expected by December 2026, give the next tests. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a fall in fuel margins, which can lower earnings quickly.
Risks: Fuel margins are high. The U.S. fuel margin was 52.61 cents per gallon in Q1 fiscal 2027, up 8.61 cents from a year earlier. Lower fuel margins can lower earnings quickly, and fuel volumes fall slowly as cars use less fuel. The Żabka purchase is the largest in the company's history. It needs approvals from competition and investment authorities, and it raises net debt to about 3.0 times adjusted EBITDA at closing. Tobacco sales are weak. Rules and illegal trade lower tobacco sales in Canada, where same-store merchandise sales were flat in Q1 fiscal 2027. The company reports in U.S. dollars, but its shares trade in Canadian dollars. Changes in the exchange rate change the value of the earnings in Canadian dollars.
Balance sheet: Cash: $3.2B Debt: $15.4B Net debt: $12.2B EBITDA, last 12 months: $6.9B Net debt / EBITDA: 1.8× (low) Couche-Tard funds itself with senior notes and bank credit facilities. All amounts are in U.S. dollars. Interest-bearing debt was $15.38 billion and cash was $3.20 billion at July 19, 2026, so net interest-bearing debt was $12.18 billion, down from $13.33 billion at April 26, 2026. The company's leverage ratio fell to 1.77 times from 1.99 times. Adjusted EBITDA for the 52 weeks to July 19, 2026 was about $6.88 billion: fiscal 2026 less Q1 fiscal 2026 plus Q1 fiscal 2027, a calculation from the release figures. Return on capital employed was 13.7%. The Żabka purchase of about $8.6 billion uses cash and new and existing credit facilities. The company expects net debt of about 3.0 times adjusted EBITDA at closing, a return to its leverage framework by the second year and no change to its credit rating. As of 2026-07-19.
Checkpoints: Nov 24, 2026 (estimate): Q2 fiscal 2027 results: fuel margins and store sales. Pending. Watch: U.S. fuel margins near the 52.61 cents per gallon of Q1, positive U.S. same-store merchandise sales and lower costs pass; a large fall in fuel margins or negative same-store sales fail. Dec 2026 (estimate): Żabka tender offer closing. Pending. Watch: A closing by December 2026 with the required approvals and net debt near 3.0 times adjusted EBITDA passes; a block by regulators, a long delay or higher leverage fails.
Recent events: 2026-09-01: Couche-Tard reported Q1 fiscal 2027 results. Revenue rose 25.1% to $21.7 billion, and adjusted EBITDA rose 10.5% to $1.78 billion. Adjusted diluted EPS rose 15.4% to $0.90. U.S. same-store merchandise sales rose 1.7%, and the U.S. fuel margin rose to 52.61 cents per gallon. The leverage ratio fell to 1.77 times. The company declared a quarterly dividend of CA$0.215 per share. 2026-07-31: Couche-Tard agreed to buy control of Żabka Group, the largest convenience store operator in Poland with more than 13,000 stores, through a tender offer at PLN 32.00 per share. The offer values Żabka at about $8.6 billion. Shareholders with about 57% of the shares agreed to tender. Committed debt facilities fund the deal, and the company expects net debt of about 3.0 times adjusted EBITDA at closing and EPS growth from the deal by the second year. 2026-07-23: Couche-Tard renewed its share repurchase program. It can buy back up to 74.2 million shares, 10% of the public float, until July 22, 2027. 2026-06-22: Couche-Tard reported fiscal 2026 results. Revenue rose 5.0% to $76.5 billion, and adjusted EBITDA rose 12.7% to $6.71 billion. Adjusted diluted EPS rose 14.4% to $3.10. Q4 results included a net recovery of $260.9 million before tax, mainly from a settlement of U.S. payment card fee litigation. The company bought back 30.0 million shares for $1.6 billion in fiscal 2026.