Is it a good company at a reasonable price? I plan to continue to hold the stock that I have. I am not buying anymore but I am not buying any more stocks for my Trading Accounts. I have enough. This stock hit a high in 2021, that it has yet to repeat. TD Cowen gave a positive view of this stock, but is also worried about US tariffs threat. I must admit it has had lower highs and lower lows since 2021. This is never good. However, it is testing as relatively cheap. I would suggest caution until we have a better idea of any possible US tariffs.
I own this stock of Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF). In 2000 when I first bought this stock, it was on the Investment Reporter's list of conservative Canadian stocks. I bought stock for my trading account in 2009 because I have done well with it in my Pension Account and it was a consumer stock. I have moved all my shares from my Pension Account to my Trading Account.
When I was updating my spreadsheet, I noticed I have done well with this stock. I have had it for 25 years and I have made a total return of 11.61% per year with 9.12% from capital gains and 2.49% from dividends.
If you had invested in this company in December 2014, for $1104.66 you would have bought 9 shares at $122.74 per share. In December 2024, after 10 years you would have received $394.20 in dividends. The stock would be worth $1,360.98. Your total return would have been $1,755.18. This would be a total return of 5.20% per year with 2.11% from capital gain and 3.09% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $122.74 | $1,104.66 | 9 | 10 | $394.20 | $1,360.98 | $1,755.18 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.98%. The 5 and 10 year median dividend yields are also moderate at 4.05% and 2.69%. The historical median dividend yield is low (below 2%) at 1.70%. You notice that the dividend yield started to climb between 2018 and 2020. Prior to that, dividend yields were low. The dividend increases are moderate (between 8% and 14% per year) at 11% per year over the past 5 years. The last dividend increase was in 2025 and it was for 1.4%. They generally only have one increase a year.
The Dividend Payout Ratios (DPR) mostly good, but have been growing since 2018. The DPR for 2024 for Earnings per Share (EPS) is good at 44% with 5 year coverage at 43%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is fine at 55% with 5 year coverage good at 35%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 18% with 5 year coverage at 15%. The DPR for 2024 for Free Cash Flow (FCF) is good at 34% with 5 year coverage at 29%. But here again, sites do not agree on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 43.97% | 42.73% |
| AEPS | 55.35% | 35.13% |
| CFPS | 18.46% | 14.62% |
| FCF | 33.94% | 29.10% |
They have some good Debt Ratios but they do have a lot of debt. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.49 and currently at 0.51. The Liquidity Ratio for 2024 is good at 1.79 and 1.79 currently. The Debt Ratio for 2024 is fine at 1.47 and 1.47 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.14 and 2.14 and currently at 3.14 and 2.14.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.49 | 0.51 |
| Intang/GW | 0.25 | 0.26 |
| Liquidity | 1.79 | 1.79 |
| Liq. + CF | 2.06 | 1.98 |
| Debt Ratio | 1.47 | 1.47 |
| Leverage | 3.14 | 3.14 |
| D/E Ratio | 2.14 | 2.14 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 11.02% | 5.54% | 1.56% | 3.98% |
| 2014 | 10 | 14.08% | 5.20% | 2.11% | 3.09% |
| 2009 | 15 | 15.18% | 9.76% | 6.66% | 3.10% |
| 2004 | 20 | 14.11% | 7.42% | 5.07% | 2.35% |
| 1999 | 25 | 12.13% | 8.30% | 6.10% | 2.20% |
| 1994 | 30 | 10.01% | 11.08% | 8.39% | 2.69% |
| 1989 | 35 | 9.42% | 7.16% | 5.35% | 1.81% |
| 1988 | 36 | 9.82% | 8.33% | 6.28% | 2.05% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.03, 9.50 and 11.58. The corresponding 10 year ratios are 10.85, 12.24 and 13.64. The corresponding historical ratios are 10.45, 13.04 and 14.84. The current ratio is 11.14 based on a stock price of $142.60 and EPS estimate for 2025 of $12.80. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.61, 9.93 and 11.65. The corresponding 10 year ratios are 10.67, 12.25 and 13.82. The current ratio is 10.60 based on a stock price of $142.60 and AEPS estimate for 2025 of $13.45. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $183.00. The 10-year low, median, and high median Price/Graham Price Ratios are 0.87, 0.99 and 1.13. The current P/GP Ratio is 0.78 based on a stock price of $142.60. This ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.77. The current ratio is 1.29 based on a stock price of $142.60, Book Value of $6,155M and Book Value per Share of $110.66. The current ratio is 19% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.38. The current P/CF Ratio is 4.93 based on a stock price of $142.60, Cash Flow per Share estimate for 2025 of $28.91 and Cash Flow of $1,608M. The current ratio is 41% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.70%. The current dividend yield is 4.98% based on a stock price of $142.60 and dividends of $7.10. The current yield is 193% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 2.69%. The current dividend yield is 4.98% based on a stock price of $142.60 and dividends of $7.10. The current yield is 85% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.64. The current ratio is 0.48 based on a stock price of $142.60, Revenue estimate for 2025 of $16,673 and Revenue per Share of $299.76. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is relatively cheap. The dividend yield tests say that the stock price is relatively cheap. The rest of the testing says that the stock price is either cheap or reasonable but below the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3), Hold (6), and Underperform (2). The consensus is a Hold. The 12 month stock price consensus is $161.08, with a high of $195.00 and low of $135.00. The consensus stock price of $161.08 implies a total return of 17.94% with 12.96% from capital gains and 4.98% from dividends based on a current stock price of $142.60.
When I looked at analysts’ recommendations last year, I find Strong Buy (1), Buy (4), Hold (5), and Underperform (1). The consensus is a Buy. The 12 month stock price consensus is $155.50, with a high of $195.00 and low of $130.00. The consensus stock price of $155.50 implies a total return of 20.79% with 15.43% from capital gains and 5.37% from dividends based on a stock price of $130.43. What happened was a stock price move to $142.60, an increase of 9.33%. Last year my stock pricing testing said the stock price was relatively cheap.
There is only one entry for 2025 on Stock Chase which is a Do Not Buy because the company is facing headwinds like a weaker CAD, trade war risk and potential recession. Last year there was a mix of Buy and Do Not Buy. Generally, some analysts though retail is a tough business. Stock Chase gives this stock 5 stars out of 5. Joey Frenette on Motley Fool thinks this stock is the best deal in retail today. Demetris Afxentiou on Motley Fool says this stock is a no brainer dividend stock to buy. The company put out a Press Release on their fourth quarter of 2024.
Simply Wall Street via Yahoo Finance thinks this stock is overpriced by 39%. Simply Wall Street gives this stock 3 and one half stars out of 5. They have 3 warnings out on this stock of earnings are forecast to decline by an average of 1% per year for the next 3 years; has a high level of debt; and large one-off items impacting financial results. For the last time, that you why you pay attention to Adjusted Earnings per Share.
Canadian Tire is a leading general merchandise retailer. The retailer boasts a wide array of owned and affiliated banners that include its iconic namesake brand, Mark's, Sport Chek, Sports Experts, PartSource, Party City, and Helly Hansen. The firm also offers a loyalty program with 11 million members and owns a financial services arm that manages a credit card portfolio for its more than 2 million active users. Its web site is here Canadian Tire Corp.
The last stock I wrote about was about was Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more. The next stock I will write about will be RioCan Real Estate (TSX-REI.UN, OTC-RIOCF) ... learn more on Monday, March 3, 2025 around 5 pm.
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They actually announced last week that they were selling Helly Hansen. Proceeds will go to debt reduction, shares buybacks and investments.
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