Q: Top of the morning to ya. I know very little about technical analysis but I am guessing if it was applied to ATD it might signal “sell”. Can I have your thoughts on its valuation right now given the current conditions/risks against the expected earnings going forward? Any insights much appreciated.
5i Research Answer:
ATD broke some support at $70, so could be a bit vulnerable as there is not a lot of support until $60. But at 17X earnings its valuation is below its historical averages, and its direction in the short term is more likely to be determined by its success (or lack thereof) in acquiring 7/11. Not a lot of EPS growth is expected in 2025, but growth is set to accelerate to 10%+ in 2026. We would be comfortable buying this. It is not risk-free, but we think well-positioned in the current uncertain market. It has $17B in European sales which may help offset any North American weakness.