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Canadian Tire (TSE:CTC.A)
TSX:CTC.A
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Canadian Tire
(TSX:CTC.A)
66Neutral
Positive Factors
Balance Sheet
Canadian Tire's balance sheet is now materially improved to weather negative scenarios and allow for more capital distribution back to shareholders.
Competitive Position
Share gains vs. big-box & online competitors following initiation softens concerns regarding U.S. retailers scaling their presence up north.
Financial Performance
The sale of Helly Hansen for $1.276 billion will help to further deleverage and provide a good liquidity buffer.
Negative Factors
Consumer Spending
Ongoing pressures on consumer discretionary spending are expected, despite sequential improvement in sales trends.
Macro Environment
A full-blown tariff war with the U.S. would be a significant negative for the Canadian economy.
Supply Chain
Recession and worse-than-expected margin pressure from supply chain and other inflationary pressures are key risks.
Canadian Tire (CTC.A) vs. S&P 500 (SPY)
Market Cap
$8.53B
Dividend Yield4.92%
Average Volume (3M)320.22K
Price to Earnings (P/E)9.4
Beta (1Y)0.89
Revenue Growth-1.79%
EPS Growth318.70%
CountryCA
Employees13,973
SectorConsumer Cyclical
Sector Strength51
IndustrySpecialty Retail
Share Statistics
EPS (TTM)15.96
Shares Outstanding52,197,823
10 Day Avg. Volume288,884
30 Day Avg. Volume320,216
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)N/A
Price to Sales (P/S)0.73
Price to Cash Flow (P/CF)3.40
P/FCF Ratio3.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$161.98Price Target Upside8.39% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Canadian Tire Business Overview & Revenue Model
Company DescriptionCanadian Tire Corporation, Limited provides a range of retail goods and services in Canada. It operates in three segments: Retail, CT REIT, and Financial Services. The Retail segment retails automotive maintenance products and accessories, parts, tires as well as automotive repair and roadside assistance; kitchen, home organization, decor and essentials, home electronics, pet, and cleaning and consumable products; tools, hardware, paint, electrical, plumbing, home environment, and smart home products; and outdoor recreation, exercise, footwear and apparel, hunting, fishing, camping, and sporting goods. It also retails Christmas trees, lights and decor, Halloween décor and costumes, yard care and maintenance, and snow removal equipment; patio furniture, barbeques, pools, trampolines, outdoor power equipment and tools, plants and gardening supplies; backyard amusement, pool fun, and toys and games; gasoline; sporting goods and active wear; casual and industrial apparel and footwear; and outerwear, base-layer, and workwear. This segment offers its products under the Canadian Tire, Canadian Tire Gas, Mark's, PartSource, Helly Hansen, Party City, and SportChek brand names. This segment also participates in loyalty programs, as well as sells its products online. The CT REIT segment operates as a closed-end real estate investment trust that holds a portfolio of 368 properties comprising Canadian Tire stores, Canadian Tire anchored retail developments, industrial properties, a mixed-use commercial property, and development properties. The Financial Services segment provides financial and other ancillary products and services, including consumer credit cards, in-store financing, insurance products, and retail and broker deposits; and savings accounts and guaranteed investment certificates. Canadian Tire Corporation, Limited was founded in 1922 and is headquartered in Toronto, Canada.
How the Company Makes MoneyCanadian Tire Corporation generates revenue primarily through the sale of goods across its retail banners, which include Canadian Tire retail stores, SportChek, Mark's, and others. The company earns money from product sales in categories such as automotive, home goods, sporting equipment, apparel, and seasonal items. In addition to retail sales, Canadian Tire also benefits from its financial services division, which offers credit cards and other financial products, generating additional revenue through interest and other financial fees. The company has established key partnerships with various suppliers and brands to maintain a diverse product offering and competitive pricing. Moreover, Canadian Tire's loyalty program, Triangle Rewards, helps drive customer retention and spending, further contributing to the company's earnings.
Canadian Tire Financial Statement Overview
Summary
Canadian Tire's financial performance is characterized by strong cash flow management and an improving return on equity, offset by challenges with declining revenues and fluctuating profitability. The balance sheet shows moderate leverage, but the decrease in stockholders' equity may pose future risks. Continued focus on operational efficiency and revenue growth is crucial.Income Statement
Canadian Tire's income statement shows stable gross profit margins around 34-35% over recent years, indicating effective cost management in the face of decreasing revenues. However, the net profit margin has fluctuated, with a substantial drop in the most recent year to 5.4% from 1.3% the previous year, primarily due to a significant drop in EBIT. Revenue growth has been inconsistent, with a notable decline of 7.5% in 2023. The flat EBIT and EBITDA margins in the latest year suggest challenges in operational efficiency.72
Positive
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio of 1.28, indicating a balanced approach to leveraging equity. However, there is a downward trend in stockholders' equity over the past year, which could signal financial risk. The return on equity has improved significantly to 14.4% from 3.8%, reflecting better utilization of equity to generate profits. The equity ratio stands at 27.7%, showing that a substantial portion of the company's assets are financed by equity.65
Positive
Cash Flow
Canadian Tire's cash flow statement is strong, with a significant increase in free cash flow by 108.2% in the most recent year, indicating effective cash management. The operating cash flow to net income ratio is robust at 2.3, suggesting that the company generates ample cash from its operations relative to its net income. The free cash flow to net income ratio is also favorable at 1.6, highlighting efficient cash conversion.77
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 16.36B | 16.66B | 17.81B | 16.29B | 14.87B | Gross Profit |
| 5.62B | 5.38B | 6.10B | 5.84B | 5.08B | EBIT |
| 0.00 | 1.26B | 1.67B | 1.79B | 1.27B | EBITDA |
| 2.13B | 1.48B | 2.58B | 2.64B | 2.14B | Net Income Common Stockholders |
| 887.70M | 213.30M | 1.04B | 1.13B | 751.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 575.90M | 488.40M | 490.10M | 2.34B | 1.93B | Total Assets |
| 22.24B | 21.98B | 22.10B | 21.80B | 20.38B | Total Debt |
| 7.91B | 8.81B | 7.72B | 7.09B | 7.16B | Net Debt |
| 7.46B | 8.50B | 7.41B | 5.35B | 5.87B | Total Liabilities |
| 15.15B | 15.53B | 15.06B | 15.29B | 14.54B | Stockholders Equity |
| 6.16B | 5.55B | 5.62B | 5.12B | 4.50B |
| Cash Flow | Free Cash Flow | |||
| 1.43B | 685.10M | -268.60M | 1.04B | 2.01B | Operating Cash Flow |
| 2.06B | 1.35B | 566.00M | 1.81B | 2.44B | Investing Cash Flow |
| -264.10M | -747.80M | -329.90M | -736.50M | -848.00M | Financing Cash Flow |
| -1.64B | -621.00M | -1.66B | -653.40M | -462.70M |
Canadian Tire Technical Analysis
Positive
149.44
Price Trends
151.17
Negative
152.00
Negative
148.81
Positive
Market Momentum
0.24
Negative
53.52
Neutral
55.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CTC.A, the sentiment is Positive. The current price of 149.44 is above the 20-day moving average (MA) of 146.90, below the 50-day MA of 151.17, and above the 200-day MA of 148.81, indicating a neutral trend. The MACD of 0.24 indicates Negative momentum. The RSI at 53.52 is Neutral, neither overbought nor oversold. The STOCH value of 55.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CTC.A.
Canadian Tire Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | C$21.54B | 22.75 | 13.78% | 1.41% | 1.59% | -1.98% | |
77 Outperform | C$66.16B | 18.58 | 18.66% | 1.03% | 11.62% | -8.08% | |
66 Neutral | $8.53B | 9.35 | 15.17% | 4.92% | -1.79% | 318.70% | |
59 Neutral | $12.24B | 11.04 | -1.00% | 3.78% | 1.30% | -19.54% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:CTC.A
Canadian Tire
149.44
20.99
16.34%
LBLCF
Loblaw Companies
140.85
31.01
28.23%
DLMAF
Dollarama
107.00
30.99
40.77%
TSE:ATD
Alimentation Couche-Tard Inc
70.97
-3.94
-5.26%
TSE:MRU
Metro Inc.
100.07
28.65
40.11%
CDNTF
Canadian Tire
153.45
-22.90
-12.99%
Canadian Tire Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -5.06% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance and successful strategic initiatives, such as the growth of the Triangle Rewards program and supply chain savings. However, concerns about potential tariffs and their impact on the economy, as well as specific challenges like weather and the Canada Post strike, present significant risks. Overall, the sentiment is balanced with optimism about growth and caution regarding external uncertainties.Highlights
Strong Earnings Performance
Achieved a normalized EPS of $4.07 in Q4, bringing annual EPS to $12.62. This represents a significant improvement over 2023.
Triangle Rewards Program Success
Loyalty sales grew by 4% in Q4, with members spending more and redeeming ECTM 30% higher than three years ago.
Supply Chain Modernization Savings
DC transformations in Calgary and Montreal drove $20 million in savings in 2024.
Helly Hansen Revenue Growth
Revenue increased by 12%, with strong performance in the U.S. market and direct-to-consumer channels.
SG&A Expense Reduction
Normalized retail SG&A was down $15 million in the quarter, reflecting strong cost control measures.
Lowlights
Potential Impact of Tariffs
The looming threat of tariffs poses a risk to the Canadian economy and consumer confidence, potentially affecting retail demand and bank write-offs.
Weather-Related Sales Challenges
Unusually warm weather in October and November led to lower sales in weather-dependent categories.
Canada Post Strike Impact
The strike led to over 100 basis points negative impact on comps and incurred incremental costs for alternative distribution.
Increased Write-Off Rates
The write-off rate at the bank increased to 7%, up 90 basis points compared to last year.
Company Guidance
During the Canadian Tire Corporation's earnings call for the fourth quarter and full year of 2024, the company provided several key metrics and insights into its performance and outlook. The company reported a normalized earnings per share (EPS) of $4.07 for Q4, bringing the annual EPS to $12.62. Sales were driven by strategic promotions and effective margin management, contributing to a 1% growth in retail sales and a 1.3% increase in retail revenue. The Triangle MasterCard spend at Canadian Tire Retail (CTR) increased by 2.4%, and the loyalty sales grew by 4% in Q4. The company also highlighted a 12% revenue increase at Helly Hansen and a 1.8% increase in comparable sales at Mark’s. Despite a challenging consumer environment, the company managed to decrease SG&A expenses by $15 million in the quarter and reduced corporate inventory by $135 million. Looking ahead, Canadian Tire remains cautiously optimistic about the future, monitoring potential impacts from tariffs and aiming to maintain its North Star gross margin rate of 35.9% while focusing on strategic growth initiatives and capital plans.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.