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Canadian Tire (TSE:CTC.A)
TSX:CTC.A
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Canadian Tire
(TSX:CTC.A)
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Rating:73Outperform
Price Target:
C$191.00
â–²(15.97% Upside)
Canadian Tire's overall stock score reflects its strong valuation and solid financial performance, despite recent revenue challenges and technical indicators suggesting caution. Strategic investments and customer engagement are positives, but profitability pressures and operational expenses need careful management.
Positive Factors
Negative Factors
Canadian Tire (CTC.A) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$9.19B
Dividend Yield4.3%
Average Volume (3M)286.12K
Price to Earnings (P/E)12.0
Beta (1Y)0.67
Revenue Growth0.05%
EPS Growth99.91%
CountryCA
Employees13,973
SectorConsumer Cyclical
Sector Strength84
IndustrySpecialty Retail
Share Statistics
EPS (TTM)3.57
Shares Outstanding50,498,394
10 Day Avg. Volume369,183
30 Day Avg. Volume286,118
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.89
Enterprise Value/Revenue1.07
Enterprise Value/Gross Profit3.16
Enterprise Value/Ebitda8.20
Forecast
1Y Price Target
$185.14Price Target Upside12.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Canadian Tire Business Overview & Revenue Model
Company DescriptionCanadian Tire Corporation, Limited provides a range of retail goods and services in Canada. It operates in three segments: Retail, CT REIT, and Financial Services. The Retail segment retails automotive maintenance products and accessories, parts, tires as well as automotive repair and roadside assistance; kitchen, home organization, decor and essentials, home electronics, pet, and cleaning and consumable products; tools, hardware, paint, electrical, plumbing, home environment, and smart home products; and outdoor recreation, exercise, footwear and apparel, hunting, fishing, camping, and sporting goods. It also retails Christmas trees, lights and decor, Halloween décor and costumes, yard care and maintenance, and snow removal equipment; patio furniture, barbeques, pools, trampolines, outdoor power equipment and tools, plants and gardening supplies; backyard amusement, pool fun, and toys and games; gasoline; sporting goods and active wear; casual and industrial apparel and footwear; and outerwear, base-layer, and workwear. This segment offers its products under the Canadian Tire, Canadian Tire Gas, Mark's, PartSource, Helly Hansen, Party City, and SportChek brand names. 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 368 properties comprising Canadian Tire stores, Canadian Tire anchored retail developments, industrial properties, a mixed-use commercial property, and development properties. The Financial Services segment provides financial and other ancillary products and services, including consumer credit cards, in-store financing, insurance products, and retail and broker deposits; and savings accounts and guaranteed investment certificates. Canadian Tire Corporation, Limited was founded in 1922 and is headquartered in Toronto, Canada.
How the Company Makes MoneyCanadian Tire generates revenue through multiple channels. The primary revenue streams include retail sales from its various store formats, which cater to automotive, home improvement, sports, and leisure markets. The company's extensive private label brands, such as Mastercraft and Motomaster, contribute significantly to margins. Additionally, Canadian Tire Bank provides financial services, including credit cards and personal loans, which generate interest income and fees. The company also earns revenue from its petroleum segment through the operation of gas stations. Partnerships with various suppliers and brands enhance product offerings and promotional activities, driving sales and customer loyalty. Furthermore, the Canadian Tire Money loyalty program incentivizes customer spending and retention, creating a cyclical boost to revenue.
Canadian Tire Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a strong top line growth and customer engagement, supported by strategic investments and a solid retail performance. However, decreased EPS, margin pressure, and high operational expenses highlighted challenges in maintaining profitability amidst significant investments.Q2-2025 Updates
Positive Updates
Strong Top Line Growth
Q2 showed robust top line growth with comp sales up 6.4% at CTR, 3.9% at Sport Chek, and 1% at Mark's. Retail revenue was up 9%, excluding Petroleum, driven by higher sales and shipments.
Increased Customer Engagement
Loyalty spend increased across all income levels, and credit card spend at CTR outpaced competitors for three consecutive quarters. Loyalty penetration was up 114 basis points to 54.8% on a rolling 12-month basis.
Strategic Investments and Initiatives
Investments in digital and e-commerce led to an 8% increase in e-commerce sales YTD, with CTR up 12%. The acquisition of HBC's brand assets received overwhelming positive feedback, signaling strong brand sentiment.
Stable Financial Services Performance
Financial services saw cardholder spend up close to 4%, with stable risk metrics and a net write-off rate unchanged at 7.1%.
Negative Updates
Decreased EPS
Normalized EPS was down 4% to $3.57 due to strong growth offset by investments in the True North strategy.
Margin Pressure
Retail gross margin rate was down 90 basis points to 34.8% due to mix and foreign exchange pressures.
High Operational Expenses
Retail SG&A was up $84 million, with increases due to IT investments, variable compensation, and inflationary pressures.
Investments Impacting Financial Services
Financial services IBT was down $14 million due to elevated infrastructure and regulatory spending, with an SG&A rate increase to 27%.
Company Guidance
During Canadian Tire Corporation's Q2 2025 earnings call, management highlighted several key metrics reflecting robust financial performance and strategic progress. Comparable sales increased by 6.4% at Canadian Tire Retail (CTR), 3.9% at Sport Chek, and 1% at Mark's, driven by strong demand across discretionary and essential products. Retail revenue excluding Petroleum rose by 9%, while retail gross margin dollars grew by 6.2% despite a 90 basis point dip in margin rate due to mix and foreign exchange impacts. The company's normalized earnings per share (EPS) decreased by 4% to $3.57, attributed to strategic investments in the True North strategy. Financial Services also saw growth, with card spend rising nearly 4% and receivables increasing by 1.7%. The call emphasized ongoing investments in technology, store enhancements, and loyalty partnerships, alongside expanding retail capabilities to maximize long-term shareholder value.Canadian Tire Financial Statement Overview
Summary
Canadian Tire demonstrates solid profitability with stable margins and efficient cash flow management. However, recent revenue decline and negative free cash flow growth are concerns, despite a manageable level of leverage.Income Statement
The income statement shows a stable gross profit margin at approximately 33.7% for TTM (Trailing-Twelve-Months), indicating strong cost management. However, the revenue growth has been fluctuating, with a slight decrease in the recent TTM period. Net profit margin has been consistent at around 5.2%, with a healthy EBIT margin of 8.1%. The EBITDA margin remains robust at 13.0%. Overall, the company demonstrates profitability and efficient operations, though recent revenue contraction poses a concern.78
Positive
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio of 1.42, suggesting a balanced capital structure. The equity ratio stands at 26.3%, showing a reasonable level of financial leverage. Return on equity is decent at 14.2%, driven by solid profitability. However, the relatively high leverage requires careful management to mitigate potential risks.72
Positive
Cash Flow
The cash flow statement indicates a strong operating cash flow to net income ratio of 1.9, highlighting efficient cash generation relative to earnings. The free cash flow to net income ratio is 1.17, signifying healthy free cash flow generation. However, free cash flow growth has been negative recently, impacting overall cash flow performance.75
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 16.29B | 16.36B | 16.66B | 17.81B | 16.29B | 14.87B |
| Gross Profit | 5.49B | 5.62B | 5.38B | 6.10B | 5.84B | 5.08B |
| EBITDA | 2.12B | 2.13B | 1.48B | 2.41B | 2.49B | 1.97B |
| Net Income | 848.10M | 887.70M | 213.30M | 1.04B | 1.13B | 751.80M |
Balance Sheet | ||||||
| Total Assets | 22.65B | 22.24B | 21.98B | 22.10B | 21.80B | 20.38B |
| Cash, Cash Equivalents and Short-Term Investments | 581.50M | 575.90M | 488.40M | 490.10M | 2.34B | 1.93B |
| Total Debt | 8.45B | 7.91B | 8.81B | 7.72B | 7.09B | 7.16B |
| Total Liabilities | 15.75B | 15.15B | 15.53B | 15.06B | 15.29B | 14.54B |
| Stockholders Equity | 5.96B | 6.16B | 5.55B | 5.62B | 5.12B | 4.50B |
Cash Flow | ||||||
| Free Cash Flow | 993.10M | 1.43B | 685.10M | -268.60M | 1.04B | 2.01B |
| Operating Cash Flow | 1.61B | 2.06B | 1.35B | 466.50M | 1.74B | 2.44B |
| Investing Cash Flow | -322.20M | -264.10M | -747.80M | -230.40M | -658.00M | -848.00M |
| Financing Cash Flow | -1.48B | -1.64B | -621.00M | -1.66B | -653.40M | -462.70M |
Canadian Tire Technical Analysis
Negative
164.70
Price Trends
175.49
Negative
173.02
Negative
160.63
Positive
Market Momentum
-1.49
Positive
35.29
Neutral
10.80
Positive
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 164.7 is below the 20-day moving average (MA) of 169.81, below the 50-day MA of 175.49, and above the 200-day MA of 160.63, indicating a neutral trend. The MACD of -1.49 indicates Positive momentum. The RSI at 35.29 is Neutral, neither overbought nor oversold. The STOCH value of 10.80 is Positive, 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
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | 1.97B | 12.26 | 13.68% | 2.91% | 0.57% | 8.54% | |
73 Outperform | $9.19B | 12.00 | 13.84% | 4.30% | 0.05% | 99.91% | |
72 Outperform | 2.56B | 27.78 | 166.31% | 1.25% | 5.18% | 17.66% | |
63 Neutral | 421.70M | 15.64 | 8.29% | 2.73% | 7.61% | 1.71% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:CTC.A
Canadian Tire
164.70
12.39
8.14%
TSE:GBT
BMTC Group Inc.
13.20
0.55
4.35%
TSE:LNF
Leon's Furniture
28.83
-0.25
-0.86%
TSE:PET
Pet Valu Holdings Ltd.
37.55
11.70
45.26%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.