Canadian Tire Posts Better-Than-Expected Q4

Shares of Canadian Tire (TSE: CTC.A), a general merchandise retailer selling gasoline, automobiles, sports, and home products, rose in early trading Thursday after the company beat expectations in the fourth quarter of 2021.

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Profit and revenue increased from a year ago, helped by higher comparable sales at its stores.

Revenue & Earnings

Revenue for Q4 2021 came in at C$5.14 billion, up 5.4% from C$4.87 billion in Q4 2020.

Sales at Canadian Tire stores increased 3.4% and same-store sales increased 9.8%, while sales at its SportChek banner increased 5.8% and comparable sales increased by 15.9%. Sales of its Mark’s banner increased by 9.6% while comparable sales increased by 15%.

Canadian Tire reported a net income attributable to shareholders of C$508.5 million (C$8.34 per diluted share) in Q4 2021, up from C$488.8 million (C$7.97 per diluted share) in Q4 2020.

On a normalized basis, the retailer earned C$8.42 per diluted share in the quarter, up from a normalized profit of C$8.40 per share in the same period a year ago.

Analysts on average expected adjusted earnings of C$6.70 per share and C$4.76 billion in revenue.

CEO Commentary

Canadian Tire president and CEO Greg Hicks said, “Our exceptional results in the fourth quarter capped off an outstanding year for CTC in which we delivered record EPS and remarkable sales growth for the second consecutive year. Our fourth quarter comparable sales increase of 11% in 2021 reflects the continued strength and relevance of our unique multi-category assortment and the success of our strengthened omni-channel capabilities. We welcomed 2.4 million new Triangle Rewards members in 2021, many of whom joined through SportChek and Mark’s and subsequently shopped at Canadian Tire for the first time. Our growth in membership, including more than 380,000 new Triangle credit card holders acquired by Canadian Tire Bank, demonstrates the value of our assets and our ability to meet our customers’ needs, however they choose to shop us.”

Wall Street’s Take

On February 11, BMO Capital analyst Peter Sklar kept a Hold rating on CTC.A and set a price target of C$206. This implies 5.5% upside potential.

Overall, CTC.A scores a Strong Buy consensus rating among analysts based on three Buys and one Hold. The average Canadian Tire price target of C$233.75 implies 19.5% upside potential to current levels.

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