Canadian Tire Corporation, Limited Just Missed Earnings - But Analysts Have Updated Their Models

Canadian Tire Corporation, Limited (TSE:CTC.A) just released its latest annual report and things are not looking great. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at CA$17b, statutory earnings missed forecasts by an incredible 70%, coming in at just CA$3.78 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View 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$16.8b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 298% to CA$15.26. In the lead-up to this report, the analysts had been modelling revenues of CA$17.6b and earnings per share (EPS) of CA$16.43 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of CA$161, suggesting the downgrades are not expected to have a long-term impact on Canadian Tire Corporation's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Canadian Tire Corporation, with the most bullish analyst valuing it at CA$195 and the most bearish at CA$140 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. It's pretty clear that there is an expectation that Canadian Tire Corporation's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.8% growth on an annualised basis. This is compared to a historical growth rate of 5.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that Canadian Tire Corporation is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Canadian Tire Corporation. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. 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..

You should always think about risks though. Case in point, we've spotted 2 warning signs for Canadian Tire Corporation you should be aware of, and 1 of them is a bit unpleasant.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.