Canadian Tire (CTC) AI Stock Analysis

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Canadian Tire

(TSX:CTC)

Rating:76Outperform

Price Target:

C$298.00

▲(12.45%Upside)

Canadian Tire's stock score is bolstered by a strong technical position and positive earnings call results. Despite these strengths, moderate valuation and financial challenges like declining growth and high leverage weigh on the overall score.

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

Market Cap

$10.02B

Dividend Yield2.63%

Average Volume (3M)361.00

Price to Earnings (P/E)17.4

Beta (1Y)0.80

Revenue Growth-1.12%

EPS Growth201.58%

CountryCA

Employees13,973

SectorConsumer Cyclical

Sector Strength58

IndustrySpecialty Retail

Share Statistics

EPS (TTM)2.00

Shares Outstanding3,423,366

10 Day Avg. Volume635

30 Day Avg. Volume361

Financial Highlights & Ratios

PEG Ratio-3.05

Price to Book (P/B)2.62

Price to Sales (P/S)0.00

P/FCF Ratio-54.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$140.35

Price Target Upside-47.04% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering0

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, Limited generates revenue primarily through its extensive retail network, which includes Canadian Tire stores, as well as its subsidiaries like Mark's, SportChek, and Helly Hansen. The company makes money by selling a wide range of products across various categories, including automotive, home, and sporting goods. In addition to product sales, Canadian Tire benefits from automotive services offered at its retail locations. The company also earns revenue through its financial services arm, which provides credit cards and insurance products to customers. Furthermore, Canadian Tire leverages its loyalty program, Triangle Rewards, to drive customer engagement and repeat business, providing a competitive edge in the retail market. Strategic partnerships with various vendors and suppliers, along with a focus on e-commerce and digital transformation, further enhance its revenue streams.

Canadian Tire Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 21.28%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a strong Q1 performance with significant growth in EPS and retail sales, driven by strategic initiatives and effective inventory management. However, challenges such as a potentially uncertain retail environment and anticipated cost increases from transformation initiatives indicate a balanced outlook.

Q1-2025 Updates

Positive Updates

Strong Q1 Performance

Canadian Tire Corporation reported a strong Q1 with a consolidated EPS of $2.18, a significant increase compared to the previous year, driven by sales growth and effective margin management.

Retail Segment Growth

The Retail segment saw a normalized EBITDA increase of almost 13%, reaching $334 million. Comparable sales were up 4.7%, with SportChek sales increasing by 6.3%.

Loyalty Engagement

Triangle loyalty program showed notable momentum with a penetration rate of 54.5% on a rolling 12-month basis. New partnerships with RBC and WestJet were announced, expected to enhance member benefits and data-driven personalization.

Inventory Management

Inventory at CTR was up 4% year-over-year, aligning with growth expectations in automotive and seasonal categories, with dealer inventory down 2% due to strong winter sell-through.

Negative Updates

Uncertain Retail Environment

The retail environment remains uncertain, impacting consumer behavior predictions. Despite resilience, there are concerns about the macroeconomic outlook and potential tariff impacts.

Anticipated SG&A Pressure

The company expects operating expenses to increase by $60 million in the full year due to True North transformation initiatives and inflationary pressures.

Potential Freight Cost Headwinds

While freight was a tailwind in Q1, higher freight rates are expected to become a headwind starting Q2, potentially impacting margins.

Company Guidance

In the recent Canadian Tire Corporation earnings call, the company reported a strong Q1 2025 performance, with a notable increase in consolidated EPS to $2.18, up sharply from the previous year. This was driven by a 4.7% increase in comparable sales and a retail gross margin, excluding petroleum, of 36.1%, an improvement of 19 basis points year-over-year. The company also highlighted the positive momentum in its Triangle loyalty program, with loyalty penetration on a rolling 12-month basis at 54.5%. Despite uncertainties in the retail environment, Canadian Tire has effectively managed the potential impacts of retaliatory tariffs, with only 15% of its COGS tied to U.S. goods. The company also reported a 4% increase in inventory, aligning with their growth plans, and a normalized retail EBITDA increase of almost 13%. These results underscore Canadian Tire's strategic focus on growth and efficiency, as well as its commitment to delivering value through its True North transformation strategy.

Canadian Tire Financial Statement Overview

Summary

Canadian Tire shows a stable financial position with a strong ROE and efficient operations, but faces challenges like decreasing revenue growth and higher leverage, which could impact future financial health.

Income Statement

Positive

Canadian Tire has demonstrated stable revenue generation, with a slight decrease in total revenue in the recent TTM period compared to the previous year. The Gross Profit Margin is healthy at 33.74% for TTM, showing efficient cost management. The Net Profit Margin is moderate at 5.21%, but there has been a decline in both EBIT and EBITDA margins, indicating some pressure on operational efficiency. The revenue growth rate has shown volatility, which could be a concern.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio is 1.42 for TTM, which indicates a higher leverage but manageable given industry standards. Return on Equity is robust at 14.22%, reflecting strong profitability relative to shareholders' equity. The Equity Ratio stands at 26.32%, suggesting a balanced capital structure but with room for improvement in equity strength.

Cash Flow

Positive

Operating Cash Flow to Net Income Ratio is 1.90, showing good cash conversion from earnings. However, the Free Cash Flow has decreased compared to the previous year, resulting in a negative Free Cash Flow Growth Rate. The Free Cash Flow to Net Income Ratio is 1.17, indicating a decent level of free cash flow generation relative to net income, but there is potential to improve cash reserves further.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
12.28B	16.36B	16.66B	17.81B	16.29B	14.87B
	Gross Profit
4.14B	5.62B	5.38B	6.10B	5.84B	5.08B
	EBIT
1.06B	1.30B	1.26B	1.88B	1.90B	1.27B
	EBITDA
1.52B	2.13B	1.48B	2.41B	2.49B	1.97B
	Net Income Common Stockholders
659.40M	887.70M	213.30M	1.04B	1.13B	751.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
520.30M	575.90M	488.40M	490.10M	2.34B	1.93B
	Total Assets
19.14B	22.24B	21.98B	22.10B	21.80B	20.38B
	Total Debt
8.51B	7.91B	8.81B	7.72B	7.09B	7.16B
	Net Debt
8.21B	7.46B	8.50B	7.41B	5.35B	5.87B
	Total Liabilities
14.21B	15.15B	15.53B	15.06B	15.29B	14.54B
	Stockholders Equity
3.88B	6.16B	5.55B	5.62B	5.12B	4.50B
Cash Flow		Free Cash Flow
368.30M	1.43B	685.10M	-268.60M	1.04B	2.01B
	Operating Cash Flow
978.90M	2.06B	1.35B	466.50M	1.74B	2.44B
	Investing Cash Flow
-299.00M	-264.10M	-747.80M	-230.40M	-658.00M	-848.00M
	Financing Cash Flow
-427.10M	-1.64B	-621.00M	-1.66B	-653.40M	-462.70M

Canadian Tire Technical Analysis

Technical Analysis Sentiment

Positive

Last Price265.00

Price Trends

50DMA

229.26

Positive

100DMA

225.79

Positive

200DMA

222.53

Positive

Market Momentum

MACD

8.61

Negative

RSI

66.61

Neutral

STOCH

68.53

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CTC, the sentiment is Positive. The current price of 265 is above the 20-day moving average (MA) of 248.00, above the 50-day MA of 229.26, and above the 200-day MA of 222.53, indicating a bullish trend. The MACD of 8.61 indicates Negative momentum. The RSI at 66.61 is Neutral, neither overbought nor oversold. The STOCH value of 68.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CTC.

Canadian Tire Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PET	78 Outperform	C$2.21B	24.41	99.31%	1.53%	4.61%	3.95%
CTC	76 Outperform	$10.02B	17.38	14.70%	2.63%	-1.12%	201.58%
LNF	73 Outperform	C$1.89B	11.88	14.49%	2.89%	0.47%	9.41%
GBT	69 Neutral	C$425.02M	14.43	5.95%	2.74%	5.97%	174.18%
Sector *	62 Neutral	$6.82B	11.05	2.80%	4.32%	2.67%	-24.92%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:CTC

Canadian Tire

265.00

42.23

18.96%

TSE:GBT

BMTC Group Inc.

13.15

0.69

5.54%

TSE:LNF

Leon's Furniture

27.67

6.79

32.52%

TSE:PET

Pet Valu Holdings Ltd.

31.40

5.78

22.56%

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.