The Company in a Nutshell
- CTC built a loved brand part of Canadians’ daily life (one out of 5 owns a Canadian Tire credit card).
- CTC successfully built an exclusive portfolio of products in the automotive, living and fixing categories.
- The company acquired Helly Hansen, a Norwegian sportswear and workwear brand, in 2018.
- Download PDF format (Last reviewed: Feb 5th 2020)
|PRO Rating||3||Dividend Yield||5.14%|
|Dividend Safety||3||Dividend Growth Since||2011|
|DDM Valuation||114.07%||Dividend Frequency||Quarterly|
Canadian Tire sells home goods, sporting equipment, apparel, footwear, automotive parts and accessories, and vehicle fuel through a 1,700-store network of company, dealer, and franchisee-operated locations across Canada. Aside from the namesake banner, stores operate primarily under the Mark’s, SportChek, Atmosphere, and PartSource monikers. The company acquired Helly Hansen, a Norwegian sportswear and work wear brand, in 2018. The firm also operates and holds majority ownership of a financing arm (Canadian Tire Financial Services; 20% owned by Scotiabank) and a REIT (CT REIT; Canadian Tire owns about 70% of the unit).
|General Information||GE Data|
|Expected Earnings Date||2020-05-07|
|Next ex-dvd date||2020-04-29|
CTC trades at a low PE ratio and is poised for additional growth in the upcoming years. If the Canadian economy slows down, it would serve as a solid shield against any stock market drops. We think CTC enjoys a unique brand recognition and has built a solid bond with Canadians. Through its private labels (MotoMaster, MasterCraft, etc.) it can compete against online retailers. Canadian Tire will continue to benefit from its leadership position in Canada and shows a strong combination of dividend growth and stock appreciation perspectives. Through its wide network, CTC is able to improve its online sale (with in-store pickups).
|5-Yr Rev. Growth:||3.59%|
|5-Yr EPS Growth:||9.02%|
|5-Yr Div Growth:||20.79%|
One of the biggest risks for Canadian Tire is online shopping. Having exclusive products and a strong retail network is helping, but there is little that CTC could offer in-store or online that another Amazon of this world can’t compete with. CTC continues to be heavy in the old school & classic marketing methods (flyers, catalogs, etc.). While it seems to work now, it could catch up to the company as baby boomers are aging. Finally, CTC is also financing a part of its customers through credit card purchases. This could blow back in their face in the event of a recession.
|Financial Debt to EBITDA (TTM)||3.24|
|Current Ratio (Quarterly)||1.7|
|Free Cash Flow (Quarterly)($B)||-0.249|
Dividend Growth Perspective
Canadian Tire has been successfully increasing its dividend since 2011. Since CTC’s stock price drop back in 2018, CTC yield just became very interesting. With its low payout ratio, CTC has enough room to stick to a generous course with shareholders. Due to its presence in the Canadian economy, CTC enjoys a steady cash flow growing quarterly. Shareholders can expect a high single-digit to double-digit dividend growth going forward.
|Payout Ratio (%)||33.82%|
|Cash Payout Ratio (%)||123.65%|
|Enter Expected Dividend Growth Rate Years 1-10:||7.00%|
|Enter Expected Terminal Dividend Growth Rate:||6.00%|
|Calculated Intrinsic Value OUTPUT 15-Cell Matrix||Metric2||Metric3||Metric4|
|Discount Rate (Horizontal)||Discount Rate (Horizontal)||Discount Rate (Horizontal)|
|Margin of Safety||8.00%||9.00%||10.00%|
|Market Cap ($)||5B|
|Price to Book Ratio||1.27|
- Data by Ycharts or Google Finance
- Dividend triangle chart is updated every 6 months.
- All other metrics are updated every 5 minutes (price) or weekly.
- The PDF format includes only comments (no metrics) and are reviewed every 6 months.