(June 23): Gas station and convenience store operator Alimentation Couche-Tard Inc saw big gains in fuel margins after the war in the Middle East caused prices to spike. The company easily beat analysts’ estimates for sales and earnings.
The Canadian retailer, the owner of the Circle K brand, reported a revenue of US$19.5 billion in the fiscal fourth quarter ended April 26, a 20% jump from the same period last year and US$750 million more than analysts had expected.
That’s despite the fact that consumers drove less. Couche-Tard said road transportation fuel volumes decreased 2.1% in the US and 4.4% in Europe and other regions, on a same-store basis, as people responded to higher pump prices. In contrast, volumes rose 2% in Canada.
Gasoline and diesel prices rose sharply after the US and Israel attacked Iran beginning in late February, and Iran responded by largely closing the Strait of Hormuz to shipping traffic.
In the US, Couche-Tard’s most important market, fuel gross margin was 52.44 cents a gallon, an increase of more than nine cents from a year earlier. “This quarter highlighted the earnings power of the model in a volatile fuel environment, with outsized fuel margin capture more than offsetting softer fuel volumes,” Raymond James analyst Bobby Griffin said in a note.
The average selling price of fuel at Couche-Tard’s company-operated US stores was US$3.60 a gallon during the quarter.
Overall, Couche-Tard earned 73 cents a share on an adjusted basis, crushing estimates of 54 cents in a Bloomberg survey.
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The company’s stock price has risen about 10% this year, giving it a market capitalisation of more than C$75 billion. Shares of rival Casey’s General Stores Inc soared more than 20% on June 10 after it also reported earnings that topped estimates.
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