Canadian Tire Corporation, Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in Canadian Tire Corporation, Limited (TSE:CTC.A) had a good week, as its shares rose 7.5% to close at CA$144 following the release of its first-quarter results. It looks like a credible result overall - although revenues of CA$3.5b were what the analysts expected, Canadian Tire Corporation surprised by delivering a (statutory) profit of CA$1.38 per share, an impressive 24% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Canadian Tire Corporation

Following last week's earnings report, Canadian Tire Corporation's nine analysts are forecasting 2024 revenues to be CA$16.7b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 111% to CA$10.69. Before this earnings report, the analysts had been forecasting revenues of CA$16.7b and earnings per share (EPS) of CA$15.26 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

The consensus price target held steady at CA$155, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Canadian Tire Corporation analyst has a price target of CA$190 per share, while the most pessimistic values it at CA$130. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Canadian Tire Corporation shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Canadian Tire Corporation's revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2024 being well below the historical 5.0% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 10% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Canadian Tire Corporation.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Canadian Tire Corporation's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Canadian Tire Corporation going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 4 warning signs for Canadian Tire Corporation (1 makes us a bit uncomfortable!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.