Canadian Tire (CTC.A) AI Stock Analysis

• Market Cap: $8.26B
• Dividend Yield: 4.86%
• Average Volume (3M): 334.87K
• Price to Earnings (P/E): 9.1
• Beta (1Y): 0.81
• Revenue Growth: -1.79%
• EPS Growth: 318.70%
• Country: CA
• Employees: 13,973
• Sector: Consumer Cyclical
• Sector Strength: 64
• Industry: Specialty Retail
• EPS (TTM): 15.96
• Shares Outstanding: 51,669,792
• 10 Day Avg. Volume: 403,000
• 30 Day Avg. Volume: 334,870
• PEG Ratio: 0.03
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.73
• Price to Cash Flow (P/CF): 3.40
• P/FCF Ratio: 3.10
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$163.61
• Price Target Upside: 12.18% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

Canadian Tire's stock score is bolstered by strong cash flow management and an attractive valuation with a low P/E ratio and high dividend yield. However, challenges such as declining revenues, a bearish technical outlook, and potential risks from tariffs and external factors weigh on the score. Strategic initiatives and cost control measures provide optimism for future improvement, but caution is advised due to external uncertainties.

Positive Factors

Earnings Growth

The Triangle rewards program, product pricing adjustments, new product introductions, product margin management and expense control are all helping to drive earnings growth in a challenging environment.

Liquidity and Financial Position

The sale of Helly Hansen for $1.276 billion will help to further deleverage and provide a good liquidity buffer.

Share Price Potential

If a trade war is averted, there is potential share price upside of 20%.

Negative Factors

Consumer Spending Pressure

Ongoing pressures on consumer discretionary spending are expected, despite sequential improvement in sales trends.

Macro Economic Challenges

Gross margin will likely face some headwinds next year from a weaker Canadian dollar, higher freight costs and elevated promotional intensity.

Trade and Tariff Risks

A full-blown tariff war with the U.S. would be a significant negative for the Canadian economy.

Canadian Tire Business Overview & Revenue Model

Company Description

Canadian Tire Corporation, Limited (CTC.A) is a leading Canadian retail company with a diversified portfolio that includes automotive, hardware, sports, leisure, and home products. The company operates through a variety of retail banners, including Canadian Tire, SportChek, Mark's, and Party City. Canadian Tire is known for its extensive network of stores across Canada, offering a wide range of products and services to meet the needs of Canadian consumers.

How the Company Makes Money

Canadian Tire Corporation generates revenue primarily through the sale of goods across its retail banners, which include Canadian Tire retail stores, SportChek, Mark's, and others. The company earns money from product sales in categories such as automotive, home goods, sporting equipment, apparel, and seasonal items. In addition to retail sales, Canadian Tire also benefits from its financial services division, which offers credit cards and other financial products, generating additional revenue through interest and other financial fees. The company has established key partnerships with various suppliers and brands to maintain a diverse product offering and competitive pricing. Moreover, Canadian Tire's loyalty program, Triangle Rewards, helps drive customer retention and spending, further contributing to the company's earnings.

Canadian Tire Financial Statement Overview

Summary

Canadian Tire's financial performance is characterized by strong cash flow management and an improving return on equity, offset by challenges with declining revenues and fluctuating profitability. The balance sheet shows moderate leverage, but the decrease in stockholders' equity may pose future risks. Continued focus on operational efficiency and revenue growth is crucial.

Income Statement

Canadian Tire's income statement shows stable gross profit margins around 34-35% over recent years, indicating effective cost management in the face of decreasing revenues. However, the net profit margin has fluctuated, with a substantial drop in the most recent year to 5.4% from 1.3% the previous year, primarily due to a significant drop in EBIT. Revenue growth has been inconsistent, with a notable decline of 7.5% in 2023. The flat EBIT and EBITDA margins in the latest year suggest challenges in operational efficiency.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 1.28, indicating a balanced approach to leveraging equity. However, there is a downward trend in stockholders' equity over the past year, which could signal financial risk. The return on equity has improved significantly to 14.4% from 3.8%, reflecting better utilization of equity to generate profits. The equity ratio stands at 27.7%, showing that a substantial portion of the company's assets are financed by equity.

Cash Flow

Canadian Tire's cash flow statement is strong, with a significant increase in free cash flow by 108.2% in the most recent year, indicating effective cash management. The operating cash flow to net income ratio is robust at 2.3, suggesting that the company generates ample cash from its operations relative to its net income. The free cash flow to net income ratio is also favorable at 1.6, highlighting efficient cash conversion.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
16.36B	16.66B	17.81B	16.29B	14.87B
	Gross Profit
5.62B	5.38B	6.10B	5.84B	5.08B
	EBIT
0.00	1.26B	1.67B	1.79B	1.27B
	EBITDA
2.13B	1.48B	2.58B	2.64B	2.14B
	Net Income Common Stockholders
887.70M	213.30M	1.04B	1.13B	751.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
575.90M	488.40M	490.10M	2.34B	1.93B
	Total Assets
22.24B	21.98B	22.10B	21.80B	20.38B
	Total Debt
7.91B	8.81B	7.72B	7.09B	7.16B
	Net Debt
7.46B	8.50B	7.41B	5.35B	5.87B
	Total Liabilities
15.15B	15.53B	15.06B	15.29B	14.54B
	Stockholders Equity
6.16B	5.55B	5.62B	5.12B	4.50B
Cash Flow		Free Cash Flow
1.43B	685.10M	-268.60M	1.04B	2.01B
	Operating Cash Flow
2.06B	1.35B	566.00M	1.81B	2.44B
	Investing Cash Flow
-264.10M	-747.80M	-329.90M	-736.50M	-848.00M
	Financing Cash Flow
-1.64B	-621.00M	-1.66B	-653.40M	-462.70M

Canadian Tire Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 145.85
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CTC.A, the sentiment is Negative. The current price of 145.85 is below the 20-day moving average (MA) of 147.47, below the 50-day MA of 148.12, and below the 200-day MA of 149.46, indicating a bearish trend. The MACD of 0.24 indicates Negative momentum. The RSI at 53.52 is Neutral, neither overbought nor oversold. The STOCH value of 55.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CTC.A.

Canadian Tire Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRU	80 Outperform	C$21.69B	23.00	13.78%	1.39%	1.59%	-1.98%
L	78 Outperform	$61.66B	29.06	19.33%	1.00%	2.49%	7.16%
ATD	77 Outperform	C$67.23B	18.88	18.66%	1.04%	11.62%	-8.08%
DOL	76 Outperform	$44.81B	38.73	152.86%	0.23%	9.30%	16.85%
CTC.A	66 Neutral	$8.26B	9.14	15.17%	4.86%	-1.79%	318.70%
CTC	61 Neutral	$8.26B	13.14	15.17%	3.42%	-1.79%	318.70%
Sector *	59 Neutral	$11.48B	10.33	-0.84%	4.02%	1.25%	-16.06%