TSX:CTC.A

Stock Analysis Report

Canadian Tire Corporation

Executive Summary

Canadian Tire Corporation, Limited provides a range of retail goods and services in Canada.

Rewards

Trading at 86.5% below its fair value

Revenue is forecast to grow 6.2% per year

Earnings grew by 12.4% over the past year

Pays a high and reliable dividend of 5%

Risk Analysis

Earnings are forecast to decline by an average of -8.9% per year for the next 3 years

Debt is not well covered by operating cash flow

Highly volatile share price over past 3 months

Significant insider selling over the past 3 months



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Share Price & News

How has Canadian Tire Corporation's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CTC.A's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

10.6%

CTC.A

6.8%

CA Multiline Retail

2.1%

CA Market


1 Year Return

-37.7%

CTC.A

-8.9%

CA Multiline Retail

-21.2%

CA Market

Return vs Industry: CTC.A underperformed the Canadian Multiline Retail industry which returned -8.9% over the past year.

Return vs Market: CTC.A underperformed the Canadian Market which returned -21.2% over the past year.


Shareholder returns

CTC.AIndustryMarket
7 Day10.6%6.8%2.1%
30 Day-21.4%-8.6%-13.8%
90 Day-36.4%-19.1%-21.9%
1 Year-35.8%-37.7%-6.4%-8.9%-18.6%-21.2%
3 Year-40.0%-44.1%33.3%23.7%-11.0%-19.3%
5 Year-24.1%-31.7%-1.8%-14.7%1.6%-13.6%

Price Volatility Vs. Market

How volatile is Canadian Tire Corporation's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Canadian Tire Corporation undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CTC.A (CA$90.95) is trading below our estimate of fair value (CA$672.16)

Significantly Below Fair Value: CTC.A is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: CTC.A is poor value based on its PE Ratio (7.2x) compared to the Multiline Retail industry average (7.2x).

PE vs Market: CTC.A is good value based on its PE Ratio (7.2x) compared to the Canadian market (10.8x).


Price to Earnings Growth Ratio

PEG Ratio: CTC.A's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: CTC.A is overvalued based on its PB Ratio (1.3x) compared to the XN Multiline Retail industry average (1x).


Next Steps

Future Growth

How is Canadian Tire Corporation forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

-8.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CTC.A's earnings are forecast to decline over the next 3 years (-8.9% per year).

Earnings vs Market: CTC.A's earnings are forecast to decline over the next 3 years (-8.9% per year).

High Growth Earnings: CTC.A's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CTC.A's revenue (6.2% per year) is forecast to grow faster than the Canadian market (3.4% per year).

High Growth Revenue: CTC.A's revenue (6.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CTC.A's Return on Equity is forecast to be low in 3 years time (18.7%).


Next Steps

Past Performance

How has Canadian Tire Corporation performed over the past 5 years?

3.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CTC.A has high quality earnings.

Growing Profit Margin: CTC.A's current net profit margins (5.8%) are higher than last year (5.3%).


Past Earnings Growth Analysis

Earnings Trend: CTC.A's earnings have grown by 3.7% per year over the past 5 years.

Accelerating Growth: CTC.A's earnings growth over the past year (12.4%) exceeds its 5-year average (3.7% per year).

Earnings vs Industry: CTC.A earnings growth over the past year (12.4%) exceeded the Multiline Retail industry 4.4%.


Return on Equity

High ROE: CTC.A's Return on Equity (16.3%) is considered low.


Next Steps

Financial Health

How is Canadian Tire Corporation's financial position?


Financial Position Analysis

Short Term Liabilities: CTC.A's short term assets (CA$9.6B) exceed its short term liabilities (CA$5.8B).

Long Term Liabilities: CTC.A's short term assets (CA$9.6B) exceed its long term liabilities (CA$8.3B).


Debt to Equity History and Analysis

Debt Level: CTC.A's debt to equity ratio (134.8%) is considered high.

Reducing Debt: CTC.A's debt to equity ratio has increased from 92.1% to 134.8% over the past 5 years.

Debt Coverage: CTC.A's debt is not well covered by operating cash flow (14.7%).

Interest Coverage: CTC.A's interest payments on its debt are well covered by EBIT (5.5x coverage).


Balance Sheet


Next Steps

Dividend

What is Canadian Tire Corporation's current dividend yield, its reliability and sustainability?

5.00%

Current Dividend Yield


Upcoming Dividend Payment


Dividend Yield vs Market

Notable Dividend: CTC.A's dividend (5%) is higher than the bottom 25% of dividend payers in the Canadian market (2.57%).

High Dividend: CTC.A's dividend (5%) is low compared to the top 25% of dividend payers in the Canadian market (8.24%).


Stability and Growth of Payments

Stable Dividend: CTC.A's dividends per share have been stable in the past 10 years.

Growing Dividend: CTC.A's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (33.7%), CTC.A's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CTC.A's dividends in 3 years are forecast to be well covered by earnings (35% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

0.08yrs

Average management tenure


CEO

Greg Hicks (48yo)

0.083

Tenure

Mr. Gregory Hubert Hicks, also known as Greg, serves as President, Chief Executive Officer and Executive Director at Canadian Tire Corporation, Limited since March 12, 2020. Mr. Hicks serves as Chair of th ...


Leadership Team

NamePositionTenureCompensationOwnership
James Christie
Executive VPno dataCA$2.97m0.014% CA$824.4k
Stephen Wetmore
Honorary Director & Advisor0.083yrCA$9.69mno data
Mahes Wickramasinghe
Executive VP of International & President of Canadian Tire Financial Services3.5yrsCA$2.85m0.0050% CA$296.9k
Gregory Hicks
CEO, President & Executive Director0.083yrno data0.0067% CA$396.2k
Gregory Craig
CFO & Executive VP0.083yrno data0.012% CA$736.3k
Rex Lee
Senior VP & Chief Information Officerno datano datano data
Lisa Greatrix
Senior Vice President of Finance & Investor Relationsno datano datano data
Jane Shaw
Vice President of Communicationsno datano datano data
Susan O'Brien
Senior Vice President of Marketing2.83yrsno datano data
John Pershing
Executive VP & Chief Human Resources Officerno datano datano data

0.08yrs

Average Tenure

61yo

Average Age

Experienced Management: CTC.A's management team is not considered experienced ( 0.1 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Stephen Wetmore
Honorary Director & Advisor0.083yrCA$9.69mno data
Gregory Hicks
CEO, President & Executive Director0.083yrno data0.0067% CA$396.2k
Cynthia Trudell
Independent Director0.92yrCA$143.32kno data
Maureen Sabia
Independent Non-Executive Chairman of the Board13.08yrsCA$573.43k0.0083% CA$492.0k
Martha Billes
Independent Director40.25yrsCA$247.47k0.0093% CA$552.4k
Owen Billes
Non-Independent Director16.25yrsCA$200.74k0.022% CA$1.3m
Diana Chant
Independent Director5.25yrsCA$250.50k0.0036% CA$214.7k
James Goodfellow
Independent Director10.25yrsCA$319.37k0.0098% CA$580.7k
John A. Furlong
Independent Director9.25yrsCA$220.63kno data
Claude L'Heureux
Non-Independent Director9.25yrsCA$197.00k0.0052% CA$309.9k

9.3yrs

Average Tenure

66yo

Average Age

Experienced Board: CTC.A's board of directors are considered experienced (9.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: CTC.A insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Canadian Tire Corporation, Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Canadian Tire Corporation, Limited
  • Ticker: CTC.A
  • Exchange: TSX
  • Founded: 1922
  • Industry: General Merchandise Stores
  • Sector: Retail
  • Market Cap: CA$5.914b
  • Shares outstanding: 61.11m
  • Website: https://www.corp.canadiantire.ca

Number of Employees


Location

  • Canadian Tire Corporation, Limited
  • 2180 Yonge Street
  • PO Box 770
  • Toronto
  • Ontario
  • M4P 2V8
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CTCTSX (The Toronto Stock Exchange)Common SharesCACADDec 1972
CDNT.FOTCPK (Pink Sheets LLC)Common SharesUSUSDDec 1972
CTC.ATSX (The Toronto Stock Exchange)YesClass A Non-Voting SharesCACADAug 1973
YAAADB (Deutsche Boerse AG)YesClass A Non-Voting SharesDEEURAug 1973
CDNA.FOTCPK (Pink Sheets LLC)YesClass A Non-Voting SharesUSUSDAug 1973

Biography

Canadian Tire Corporation, Limited provides a range of retail goods and services in Canada. The company operates in three segments: Retail, CT REIT, and Financial Services. The Retail segment retails general merchandise, apparel, footwear, sporting goods, and petroleum under the Canadian Tire, PartSource, Petroleum, Gas+, Party City, Mark’s, Mark’s Work Wearhouse, L’Équipeur, Helly Hansen, SportChek, Sports Experts, Atmosphere, Pro Hockey Life, National Sports, Sports Rousseau, and Hockey Experts banners. 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 properties comprising Canadian Tire stores, Canadian Tire anchored retail developments, mixed-use commercial property, and distribution centers. The Financial Services segment provides financial and other ancillary products and services, including credit cards, in-store financing, insurance products, and retail and broker deposits; and savings accounts and guaranteed investment certificates. This segment also offers payment processing services to its retail banners. Canadian Tire Corporation, Limited was founded in 1922 and is headquartered in Toronto, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/08 06:37
End of Day Share Price2020/04/07 00:00
Earnings2019/12/28
Annual Earnings2019/12/28


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.