CANADIAN TIRE CORP (CTC.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:CTC - CA1366811034 - Common Stock
217.25 CAD
-2.85 (-1.29%)
CTC gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 3 industry peers in the Broadline Retail industry. CTC scores quite bad on profitability, while its financial health is fine. Not spectacular, but in line with the averages. CTC is valued correctly, but it does not seem to be growing. CTC also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- CTC had positive earnings in the past year.
- In the past year CTC had a positive cash flow from operations.
- CTC had positive earnings in each of the past 5 years.
- CTC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- Looking at the Return On Assets, with a value of 3.33%, CTC is doing worse than 66.67% of the companies in the same industry.
- CTC has a worse Return On Equity (12.37%) than 66.67% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 5.83%, CTC is doing worse than 66.67% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for CTC is below the industry average of 11.07%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.33% | ||
| ROE | 12.37% | ||
| ROIC | 5.83% |
ROA(3y)3.23%
ROA(5y)3.71%
ROE(3y)12.28%
ROE(5y)15.11%
ROIC(3y)6.91%
ROIC(5y)7.09%
1.3 Margins
- With a Profit Margin value of 4.49%, CTC is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
- CTC's Profit Margin has been stable in the last couple of years.
- The Operating Margin of CTC (8.54%) is worse than 66.67% of its industry peers.
- In the last couple of years the Operating Margin of CTC has grown nicely.
- CTC has a Gross Margin of 34.22%. This is in the lower half of the industry: CTC underperforms 66.67% of its industry peers.
- In the last couple of years the Gross Margin of CTC has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 8.54% | ||
| PM (TTM) | 4.49% | ||
| GM | 34.22% |
OM growth 3Y-1.62%
OM growth 5Y2.41%
PM growth 3Y-7.79%
PM growth 5Y0.27%
GM growth 3Y-1.38%
GM growth 5Y0.48%
2. Health
2.1 Basic Checks
- CTC has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
- CTC has about the same amout of shares outstanding than it did 1 year ago.
- CTC has less shares outstanding than it did 5 years ago.
- CTC has a better debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 2.00 indicates that CTC is not a great score, but indicates only limited risk for bankruptcy at the moment.
- With a decent Altman-Z score value of 2.00, CTC is doing good in the industry, outperforming 66.67% of the companies in the same industry.
- CTC has a debt to FCF ratio of 17.07. This is a negative value and a sign of low solvency as CTC would need 17.07 years to pay back of all of its debts.
- With a Debt to FCF ratio value of 17.07, CTC is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
- CTC has a Debt/Equity ratio of 1.13. This is a high value indicating a heavy dependency on external financing.
- CTC has a Debt to Equity ratio of 1.13. This is in the better half of the industry: CTC outperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.13 | ||
| Debt/FCF | 17.07 | ||
| Altman-Z | 2 |
ROIC/WACC0.79
WACC7.42%
2.3 Liquidity
- CTC has a Current Ratio of 1.80. This is a normal value and indicates that CTC is financially healthy and should not expect problems in meeting its short term obligations.
- With a decent Current ratio value of 1.80, CTC is doing good in the industry, outperforming 66.67% of the companies in the same industry.
- A Quick Ratio of 1.36 indicates that CTC should not have too much problems paying its short term obligations.
- The Quick ratio of CTC (1.36) is better than 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.8 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
- CTC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.68%, which is quite good.
- CTC shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -0.74% yearly.
- Looking at the last year, CTC shows a decrease in Revenue. The Revenue has decreased by -0.13% in the last year.
- The Revenue has been growing slightly by 2.39% on average over the past years.
EPS 1Y (TTM)12.68%
EPS 3Y-12.66%
EPS 5Y-0.74%
EPS Q2Q%5.29%
Revenue 1Y (TTM)-0.13%
Revenue growth 3Y0.13%
Revenue growth 5Y2.39%
Sales Q2Q%-2.08%
3.2 Future
- The Earnings Per Share is expected to grow by 6.72% on average over the next years.
- Based on estimates for the next years, CTC will show a small growth in Revenue. The Revenue will grow by 0.54% on average per year.
EPS Next Y5.23%
EPS Next 2Y5.93%
EPS Next 3Y6.72%
EPS Next 5YN/A
Revenue Next Year-1.34%
Revenue Next 2Y-0.04%
Revenue Next 3Y0.54%
Revenue Next 5YN/A
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- CTC is valuated correctly with a Price/Earnings ratio of 16.19.
- 66.67% of the companies in the same industry are more expensive than CTC, based on the Price/Earnings ratio.
- The average S&P500 Price/Earnings ratio is at 27.21. CTC is valued slightly cheaper when compared to this.
- With a Price/Forward Earnings ratio of 15.37, CTC is valued correctly.
- Based on the Price/Forward Earnings ratio, CTC is valued a bit cheaper than 66.67% of the companies in the same industry.
- CTC is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.19 | ||
| Fwd PE | 15.37 |
4.2 Price Multiples
- 66.67% of the companies in the same industry are more expensive than CTC, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, CTC is valued a bit cheaper than 66.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.18 | ||
| EV/EBITDA | 8.32 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
PEG (NY)3.1
PEG (5Y)N/A
EPS Next 2Y5.93%
EPS Next 3Y6.72%
5. Dividend
5.1 Amount
- CTC has a Yearly Dividend Yield of 4.11%, which is a nice return.
- Compared to an average industry Dividend Yield of 2.81, CTC pays a better dividend. On top of this CTC pays more dividend than 100.00% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.81, CTC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.11% |
5.2 History
- On average, the dividend of CTC grows each year by 20.98%, which is quite nice.
- CTC has been paying a dividend for at least 10 years, so it has a reliable track record.
- CTC has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)20.98%
Div Incr Years14
Div Non Decr Years22
5.3 Sustainability
- 49.67% of the earnings are spent on dividend by CTC. This is a bit on the high side, but may be sustainable.
- The dividend of CTC is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP49.67%
EPS Next 2Y5.93%
EPS Next 3Y6.72%
CANADIAN TIRE CORP / CTC.CA FAQ
Can you provide the ChartMill fundamental rating for CANADIAN TIRE CORP?
ChartMill assigns a fundamental rating of 4 / 10 to CTC.CA.
Can you provide the valuation status for CANADIAN TIRE CORP?
ChartMill assigns a valuation rating of 4 / 10 to CANADIAN TIRE CORP (CTC.CA). This can be considered as Fairly Valued.
How profitable is CANADIAN TIRE CORP (CTC.CA) stock?
CANADIAN TIRE CORP (CTC.CA) has a profitability rating of 3 / 10.
How financially healthy is CANADIAN TIRE CORP?
The financial health rating of CANADIAN TIRE CORP (CTC.CA) is 4 / 10.
Is the dividend of CANADIAN TIRE CORP sustainable?
The dividend rating of CANADIAN TIRE CORP (CTC.CA) is 8 / 10 and the dividend payout ratio is 49.67%.