Canadian Tire (CTC.A) AI Stock Analysis

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Canadian Tire

(OTC:CTC.A)

Rating:65Neutral

Price Target:

C$172.00

▲(7.70% Upside)

Canadian Tire's overall stock score is driven by its solid financial performance and attractive valuation, which are offset by bearish technical indicators and challenges in profitability due to strategic investments. The strong top-line growth and positive consumer sentiment provide some optimism, but the market momentum suggests caution.

Positive Factors

Balance Sheet Improvement

The Helly Hansen divestiture is expected to improve the company's balance sheet.

Financial Performance

The target price has been raised to $191, suggesting a higher valuation for the Retail segment.

Stock Activity

Recent stock repurchase activity suggests potential upside for investors.

Negative Factors

Freight Costs

Analysts still assume some year-over-year gross margin contraction due to higher freight costs.

Operating Expenses

The analyst has downgraded the stock from Outperform to Market due to a more cautious outlook on operating expenses.

Tariff Concerns

The stock ranks lower in the analyst's preferred order due to ongoing tariff concerns.

Canadian Tire (CTC.A) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$8.92B

Dividend Yield4.43%

Average Volume (3M)251.63K

Price to Earnings (P/E)11.6

Beta (1Y)0.71

Revenue Growth0.05%

EPS Growth99.91%

CountryCA

Employees13,973

SectorConsumer Cyclical

Sector Strength72

IndustrySpecialty Retail

Share Statistics

EPS (TTM)3.57

Shares Outstanding50,646,492

10 Day Avg. Volume340,099

30 Day Avg. Volume251,625

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$183.14

Price Target Upside14.68% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Canadian Tire Business Overview & Revenue Model

Company DescriptionCanadian Tire Corporation, Limited (CTC.A) is a Canada-based retail company that operates a diversified portfolio of businesses in the retail, financial services, and petroleum sectors. Founded in 1922, Canadian Tire is best known for its extensive range of automotive, hardware, sports, leisure, and home products, which are offered through its retail stores, including Canadian Tire stores, Mark's, and SportChek. The company also provides financial services through Canadian Tire Bank, offering credit cards and other financial products, and operates a network of gas stations across the country.

How the Company Makes MoneyCanadian Tire generates revenue through multiple channels. The primary revenue streams include retail sales from its various store formats, which cater to automotive, home improvement, sports, and leisure markets. The company's extensive private label brands, such as Mastercraft and Motomaster, contribute significantly to margins. Additionally, Canadian Tire Bank provides financial services, including credit cards and personal loans, which generate interest income and fees. The company also earns revenue from its petroleum segment through the operation of gas stations. Partnerships with various suppliers and brands enhance product offerings and promotional activities, driving sales and customer loyalty. Furthermore, the Canadian Tire Money loyalty program incentivizes customer spending and retention, creating a cyclical boost to revenue.

Canadian Tire Earnings Call Summary

Earnings Call Date:Aug 07, 2025

(Q2-2025)

% Change Since: -13.73%|

Next Earnings Date:Nov 06, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a strong top line performance with positive trends in customer metrics and brand perception. However, this was balanced by challenges in profitability and increased expenses due to strategic investments and market pressures.

Q2-2025 Updates

Positive Updates

Strong Top Line Growth

Q2 showed robust top line growth with comp sales up 6.4% at CTR, 3.9% at Sport Chek, and 1% at Mark's. Retail sales were up 5.6% and retail revenue increased by 9% excluding Petroleum.

Loyalty and Consumer Health

Growth in both loyalty and non-loyalty sales with increases in traffic and basket size. Loyalty spend increased across every income level tracked.

Market Share and Brand Trust

Canadian Tire gained market share, with an increase in value perception and a widened gap in brand trust compared to global competitors.

Retail Execution and Inventory Management

Retail IBT grew by close to 10% and dealer inventory was in line with last year, reflecting strong sell-through.

Positive Consumer Sentiment

Customer confidence showed signs of recovery, with credit card spend at CTR growing faster than competitors for three consecutive quarters.

Negative Updates

EPS Decline

Normalized EPS was down 4% to $3.57, offset by investments in the True North strategy and lower financial services IBT.

Investment Impact on Bank Profitability

Elevated infrastructure spending at the bank is expected to dampen profitability this year and in 2026.

Margin Rate Pressure

Retail gross margin rate was down 90 basis points to 34.8%, impacted by mix and foreign exchange.

Increased SG&A Expenses

Retail SG&A increased by $84 million due to IT investments, variable compensation, and inflationary costs, contributing to pressure on the SG&A rate.

Company Guidance

During the Canadian Tire Corporation's Q2 2025 earnings call, management highlighted several key metrics and strategic initiatives. The company achieved strong top-line growth, with comparable sales increasing by 6.4% at Canadian Tire Retail (CTR), 3.9% at Sport Chek, and 1% at Mark's. Retail revenue was up 9% excluding Petroleum, driven by higher sales and shipments, particularly in discretionary categories such as seasonal and gardening products. The loyalty program saw a penetration increase of 114 basis points to 54.8% on a rolling 12-month basis, and credit card spending at CTR outpaced competitors for three consecutive quarters. Despite a robust retail performance, normalized EPS decreased by 4% to $3.57, impacted by strategic investments in the True North transformation strategy. The strategy includes initiatives like expanding store concepts, enhancing e-commerce capabilities, and investing in operational infrastructure at the bank, which resulted in a 27% SG&A rate for financial services. The company also reported stable customer risk metrics at the bank with a net write-off rate of 7.1% and an allowance rate of 12.3%. As the company continues its transformation, it anticipates steady improvement in long-term shareholder value, driven by strategic investments and operational efficiencies.

Canadian Tire Financial Statement Overview

Summary

Canadian Tire demonstrates solid profitability and effective cash flow management with stable margins and efficient cash conversion metrics. However, revenue decline and negative free cash flow growth are concerns, along with high leverage that requires careful management.

Income Statement

Positive

The income statement shows a stable gross profit margin at approximately 33.7% for TTM (Trailing-Twelve-Months), indicating strong cost management. However, the revenue growth has been fluctuating, with a slight decrease in the recent TTM period. Net profit margin has been consistent at around 5.2%, with a healthy EBIT margin of 8.1%. The EBITDA margin remains robust at 13.0%. Overall, the company demonstrates profitability and efficient operations, though recent revenue contraction poses a concern.

Balance Sheet

Positive

The balance sheet reflects a moderate debt-to-equity ratio of 1.42, suggesting a balanced capital structure. The equity ratio stands at 26.3%, showing a reasonable level of financial leverage. Return on equity is decent at 14.2%, driven by solid profitability. However, the relatively high leverage requires careful management to mitigate potential risks.

Cash Flow

Positive

The cash flow statement indicates a strong operating cash flow to net income ratio of 1.9, highlighting efficient cash generation relative to earnings. The free cash flow to net income ratio is 1.17, signifying healthy free cash flow generation. However, free cash flow growth has been negative recently, impacting overall cash flow performance.

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
EBITDA	2.13B	1.48B	2.41B	2.49B	1.97B
Net Income	887.70M	213.30M	1.04B	1.13B	751.80M
Balance Sheet
Total Assets	22.24B	21.98B	22.10B	21.80B	20.38B
Cash, Cash Equivalents and Short-Term Investments	575.90M	488.40M	490.10M	2.34B	1.93B
Total Debt	7.91B	8.81B	7.72B	7.09B	7.16B
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	466.50M	1.74B	2.44B
Investing Cash Flow	-264.10M	-747.80M	-230.40M	-658.00M	-848.00M
Financing Cash Flow	-1.64B	-621.00M	-1.66B	-653.40M	-462.70M

Canadian Tire Technical Analysis

Technical Analysis Sentiment

Negative

Last Price159.70

Price Trends

50DMA

181.52

Negative

100DMA

166.22

Negative

200DMA

157.60

Positive

Market Momentum

MACD

-2.49

Positive

RSI

16.84

Positive

STOCH

11.05

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CTC.A, the sentiment is Negative. The current price of 159.7 is below the 20-day moving average (MA) of 185.10, below the 50-day MA of 181.52, and above the 200-day MA of 157.60, indicating a neutral trend. The MACD of -2.49 indicates Positive momentum. The RSI at 16.84 is Positive, neither overbought nor oversold. The STOCH value of 11.05 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CTC.A.

Canadian Tire Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PET	79 Outperform	C$2.45B	26.61	126.66%	1.28%	5.18%	17.66%
LNF	76 Outperform	C$2.04B	12.68	14.38%	2.68%	0.57%	8.54%
CTC.A	65 Neutral	C$8.92B	11.64	13.84%	4.43%	0.05%	99.91%
Sector *	63 Neutral	€17.56B	13.30	15.56%	3.62%	-0.67%	-125.81%
GBT	62 Neutral	C$402.91M	13.84	5.95%	2.85%	5.97%	174.18%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:CTC.A

Canadian Tire

159.70

16.81

11.77%

TSE:GBT

BMTC Group Inc.

13.22

0.70

5.59%

TSE:LNF

Leon's Furniture

28.46

2.68

10.40%

TSE:PET

Pet Valu Holdings Ltd.

36.46

12.58

52.68%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 12, 2025