In a report released yesterday, Tamy Chen from BMO Capital maintained a Buy rating on Canadian Tire, with a price target of C$191.00.
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Tamy Chen has given her Buy rating due to a combination of factors influencing Canadian Tire’s performance. One of the key reasons is the expectation of positive same-store sales (SSS) growth, which is projected to be 1.5% for Q2/25, with potential upside due to a weak comparison from the previous year. Additionally, despite some anticipated year-over-year contraction in gross margins due to higher freight costs, there is a favorable sales mix that might mitigate these effects, leading to a slightly improved margin outlook for the quarter.
Another factor contributing to the Buy rating is the accelerated pace of share repurchases, which has positively impacted earnings per share estimates. Moreover, the stock’s valuation, based on a sum-of-the-parts analysis, suggests an attractive multiple for the Retail segment. The momentum from the ‘Buy Canadian’ sentiment and stable consumer spending further supports the positive outlook. While there are concerns about potential margin contraction and SG&A growth, the overall prospects for Canadian Tire appear favorable, justifying the Buy recommendation.
Based on the recent corporate insider activity of 21 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of CDNAF in relation to earlier this year.