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 67.3% below its fair value

Revenue is forecast to grow 7.83% per year

Earnings grew by 12.4% over the past year

Pays a high and reliable dividend of 3.06%

Risk Analysis

Debt is not well covered by operating cash flow



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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.9%

CTC.A

1.8%

CA Multiline Retail

0.6%

CA Market


1 Year Return

6.0%

CTC.A

16.3%

CA Multiline Retail

5.8%

CA Market

Return vs Industry: CTC.A underperformed the Canadian Multiline Retail industry which returned 16.3% over the past year.

Return vs Market: CTC.A matched the Canadian Market which returned 5.8% over the past year.


Shareholder returns

CTC.AIndustryMarket
7 Day3.9%1.8%0.6%
30 Day2.2%-0.9%0.5%
90 Day-4.9%-2.6%3.6%
1 Year9.2%6.0%19.1%16.3%9.1%5.8%
3 Year1.5%-5.4%46.1%36.1%15.4%5.0%
5 Year38.2%24.3%25.2%9.9%33.6%14.0%

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$148.91) is trading below our estimate of fair value (CA$455.67)

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 good value based on its PE Ratio (11.8x) compared to the Multiline Retail industry average (11.8x).

PE vs Market: CTC.A is good value based on its PE Ratio (11.8x) compared to the Canadian market (15.9x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate CTC.A's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: CTC.A is overvalued based on its PB Ratio (2.2x) compared to the XN Multiline Retail industry average (1.8x).


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?

7.8%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if CTC.A's forecast earnings growth is above the savings rate (1.4%).

Earnings vs Market: Insufficient data to determine if CTC.A's earnings are forecast to grow faster than the Canadian market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: CTC.A's revenue (7.8% per year) is forecast to grow faster than the Canadian market (4.9% per year).

High Growth Revenue: CTC.A's revenue (7.8% 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 high in 3 years time (20.2%)


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 -8.6%.


Return on Equity

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


Return on Assets


Return on Capital Employed


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

Inventory Level: CTC.A has a high level of physical assets or inventory.

Debt Coverage by Assets: CTC.A's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

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

3.06%

Current Dividend Yield


Dividend Yield vs Market

company3.1%marketbottom25%1.9%markettop25%5.3%industryaverage2.4%forecastin3Years3.3%

Current dividend yield vs market & industry

Notable Dividend: CTC.A's dividend (3.06%) is higher than the bottom 25% of dividend payers in the Canadian market (1.91%).

High Dividend: CTC.A's dividend (3.06%) is low compared to the top 25% of dividend payers in the Canadian market (5.32%).


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 (32.8% payout ratio).


Next Steps

Management

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

3.3yrs

Average management tenure


CEO

Stephen Wetmore (66yo)

3.6yrs

Tenure

CA$11,924,488

Compensation

Mr. Stephen G. Wetmore is President and Chief Executive Officer of Canadian Tire Corporation, Limited (“CTC”). Mr. Wetmore was first appointed as President and CEO of CTC in January 2009. He served as Pres ...


CEO Compensation Analysis

Compensation vs Market: Stephen's total compensation ($USD9.00M) is above average for companies of similar size in the Canadian market ($USD3.73M).

Compensation vs Earnings: Stephen's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Stephen Wetmore
CEO, President & Non-Independent Director3.6yrsCA$11.92mno data
Dean McCann
Executive VP & CFO7.9yrsCA$1.86m0.044% CA$4.0m
James Christie
Executive VP0yrsCA$1.77m0.013% CA$1.2m
Allan MacDonald
Executive Vice-President of Retail2.3yrsCA$2.80m0.0065% CA$597.6k
Mahes Wickramasinghe
Executive Vice President of International3.3yrsCA$1.77m0.0038% CA$351.1k
Rex Lee
Senior VP & Chief Information Officer0yrsno datano data
Lisa Greatrix
Senior Vice President of Finance & Investor Relations0yrsno datano data
Jane Shaw
Vice President of Communications0yrsno datano data
Susan O'Brien
Senior Vice President of Marketing2.7yrsno datano data
Robyn Collver
Senior Vice-President of Risk & Regulatory Affairs0yrsno datano data

3.3yrs

Average Tenure

61yo

Average Age

Experienced Management: CTC.A's management team is considered experienced (3.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Stephen Wetmore
CEO, President & Non-Independent Director3.6yrsCA$11.92mno data
Pierre Boivin
Independent Director6.8yrsCA$208.00k0.0067% CA$619.8k
Maureen Sabia
Non-Executive Chairman of the Board12.9yrsCA$570.81k0.0083% CA$768.0k
Martha Billes
Independent Director40.1yrsCA$238.73k0.0093% CA$862.5k
Owen Billes
Non-Independent Director16.1yrsCA$190.74k0.022% CA$2.1m
Diana Chant
Independent Director5.1yrsCA$229.75k0.0036% CA$335.4k
James Goodfellow
Independent Director10.1yrsCA$299.25k0.0098% CA$907.0k
John A. Furlong
Independent Director9.1yrsCA$216.50kno data
Claude L'Heureux
Non-Independent Director9.1yrsCA$184.00k0.0089% CA$825.5k
David Court
Independent Director4.5yrsCA$213.75k0.0035% CA$327.0k

9.6yrs

Average Tenure

66yo

Average Age

Experienced Board: CTC.A's board of directors are considered experienced (9.6 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 bought more shares than they have sold 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$9.265b
  • Shares outstanding: 61.20m
  • Website: https://www.corp.canadiantire.ca

Number of Employees


Location

  • Canadian Tire Corporation, Limited
  • 2180 Yonge Street
  • P.O. 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 through three segments: Retail, CT REIT, and Financial Services. The Retail segment retails general merchandise, apparel, footwear, sporting equipment, gasoline, sporting goods and active wear, and workwear under the Canadian Tire, SportChek, Sports Experts, National Sports, Pro Hockey Life, Atmosphere, Mark’s, PartSource, Gas+, and Helly Hansen 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. The company 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 Analysis2020/02/16 23:32
End of Day Share Price2020/02/14 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.