Canadian Tire (CTC.A) AI Stock Analysis

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Canadian Tire

(TSX:CTC.A)

Rating:72Outperform

Price Target:

C$185.00

▲(9.82% Upside)

Canadian Tire's overall stock score reflects solid financial performance and attractive valuation, offset by technical indicators suggesting potential short-term weakness. Strategic investments and strong customer engagement are positive, but margin pressures and decreased EPS need attention.

Positive Factors

Balance Sheet Improvement

Inventory is in a good, lean position, and the balance sheet will be much improved following the sale of Helly Hansen.

Financial Performance

Shares have been repurchased at a faster pace, which could indicate confidence in the company's future.

Stock Valuation

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

Negative Factors

Gross Margin

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

Macroeconomic Environment

Discretionary spending may slow further due to tariff uncertainties.

Operating Expenses

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

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

Market Cap

$9.30B

Dividend Yield4.24%

Average Volume (3M)274.64K

Price to Earnings (P/E)12.2

Beta (1Y)0.76

Revenue Growth0.05%

EPS Growth99.91%

CountryCA

Employees13,973

SectorConsumer Cyclical

Sector Strength80

IndustrySpecialty Retail

Share Statistics

EPS (TTM)3.57

Shares Outstanding50,498,394

10 Day Avg. Volume205,968

30 Day Avg. Volume274,637

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.87

Enterprise Value/Revenue1.07

Enterprise Value/Gross Profit3.16

Enterprise Value/Ebitda8.20

Forecast

1Y Price Target

$184.17

Price Target Upside9.33% Upside

Rating ConsensusHold

Number of Analyst Covering6

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: |

Next Earnings Date:Nov 06, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a strong top line growth and customer engagement, supported by strategic investments and a solid retail performance. However, decreased EPS, margin pressure, and high operational expenses highlighted challenges in maintaining profitability amidst significant investments.

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 revenue was up 9%, excluding Petroleum, driven by higher sales and shipments.

Increased Customer Engagement

Loyalty spend increased across all income levels, and credit card spend at CTR outpaced competitors for three consecutive quarters. Loyalty penetration was up 114 basis points to 54.8% on a rolling 12-month basis.

Strategic Investments and Initiatives

Investments in digital and e-commerce led to an 8% increase in e-commerce sales YTD, with CTR up 12%. The acquisition of HBC's brand assets received overwhelming positive feedback, signaling strong brand sentiment.

Stable Financial Services Performance

Financial services saw cardholder spend up close to 4%, with stable risk metrics and a net write-off rate unchanged at 7.1%.

Negative Updates

Decreased EPS

Normalized EPS was down 4% to $3.57 due to strong growth offset by investments in the True North strategy.

Margin Pressure

Retail gross margin rate was down 90 basis points to 34.8% due to mix and foreign exchange pressures.

High Operational Expenses

Retail SG&A was up $84 million, with increases due to IT investments, variable compensation, and inflationary pressures.

Investments Impacting Financial Services

Financial services IBT was down $14 million due to elevated infrastructure and regulatory spending, with an SG&A rate increase to 27%.

Company Guidance

During Canadian Tire Corporation's Q2 2025 earnings call, management highlighted several key metrics reflecting robust financial performance and strategic progress. Comparable sales increased by 6.4% at Canadian Tire Retail (CTR), 3.9% at Sport Chek, and 1% at Mark's, driven by strong demand across discretionary and essential products. Retail revenue excluding Petroleum rose by 9%, while retail gross margin dollars grew by 6.2% despite a 90 basis point dip in margin rate due to mix and foreign exchange impacts. The company's normalized earnings per share (EPS) decreased by 4% to $3.57, attributed to strategic investments in the True North strategy. Financial Services also saw growth, with card spend rising nearly 4% and receivables increasing by 1.7%. The call emphasized ongoing investments in technology, store enhancements, and loyalty partnerships, alongside expanding retail capabilities to maximize long-term shareholder value.

Canadian Tire Financial Statement Overview

Summary

Canadian Tire demonstrates solid profitability with stable margins and efficient cash flow management. However, recent revenue decline and negative free cash flow growth are concerns, despite a manageable level of leverage.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	16.29B	16.36B	16.66B	17.81B	16.29B	14.87B
Gross Profit	5.49B	5.62B	5.38B	6.10B	5.84B	5.08B
EBITDA	2.12B	2.13B	1.48B	2.41B	2.49B	1.97B
Net Income	848.10M	887.70M	213.30M	1.04B	1.13B	751.80M
Balance Sheet
Total Assets	22.65B	22.24B	21.98B	22.10B	21.80B	20.38B
Cash, Cash Equivalents and Short-Term Investments	581.50M	575.90M	488.40M	490.10M	2.34B	1.93B
Total Debt	8.45B	7.91B	8.81B	7.72B	7.09B	7.16B
Total Liabilities	15.75B	15.15B	15.53B	15.06B	15.29B	14.54B
Stockholders Equity	5.96B	6.16B	5.55B	5.62B	5.12B	4.50B
Cash Flow
Free Cash Flow	993.10M	1.43B	685.10M	-268.60M	1.04B	2.01B
Operating Cash Flow	1.61B	2.06B	1.35B	466.50M	1.74B	2.44B
Investing Cash Flow	-322.20M	-264.10M	-747.80M	-230.40M	-658.00M	-848.00M
Financing Cash Flow	-1.48B	-1.64B	-621.00M	-1.66B	-653.40M	-462.70M

Canadian Tire Technical Analysis

Technical Analysis Sentiment

Negative

Last Price168.45

Price Trends

50DMA

178.75

Negative

100DMA

170.10

Negative

200DMA

159.32

Positive

Market Momentum

MACD

-2.50

Negative

RSI

41.86

Neutral

STOCH

54.30

Neutral

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 168.45 is above the 20-day moving average (MA) of 168.02, below the 50-day MA of 178.75, and above the 200-day MA of 159.32, indicating a neutral trend. The MACD of -2.50 indicates Negative momentum. The RSI at 41.86 is Neutral, neither overbought nor oversold. The STOCH value of 54.30 is Neutral, 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LNF	75 Outperform	C$2.04B	12.51	14.38%	2.70%	0.57%	8.54%
CTC.A	72 Outperform	$9.30B	12.17	13.84%	4.24%	0.05%	99.91%
PET	72 Outperform	C$2.66B	27.86	126.66%	1.24%	5.18%	17.66%
Sector *	61 Neutral	$17.59B	13.29	-5.28%	3.05%	1.25%	-14.67%
GBT	61 Neutral	C$428.15M	14.71	5.95%	2.81%	5.97%	174.18%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:CTC.A

Canadian Tire

168.45

18.87

12.62%

TSE:GBT

BMTC Group Inc.

12.81

0.43

3.47%

TSE:LNF

Leon's Furniture

29.64

1.50

5.33%

TSE:PET

Pet Valu Holdings Ltd.

37.83

13.57

55.94%

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: Sep 03, 2025