Sound bite for Twitter and StockTwits is: Using Div Yield, price reasonable. Other measures are showing this stock to be expensive, except for the dividend yield test. However, the P/E Ratio and P/B Ratios are not that high on an absolute basis. See my spreadsheet at ctc.htm.
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 this stock for my Canadian Trading account in 2009. I bought it because I have done well with it in my Pension Account and it was a consumer stock.
Last year there was no increase in outstanding shares due to stock options. When I look at insider trading, I find $4M of Insider Buying and $7.3M of Insider selling, with net insider selling at $3.3M. Insider selling is relatively low at just 0.03%.
Insiders generally own the voting shares and with just 4.4% of the outstanding shares, control this company. The Billes family owns around 61% of the vote. As I mentioned yesterday, there is currently a high premium on the voting shares that is currently running at almost 82%. If you look at the 10 year median premium it is 15%. Insiders also own Class A shares. For example, Martha Gardiner Billes owns around 1% of the outstanding Class A shares worth around $92.8M.
The 5 year low, median and high median Price/Earnings per Share Ratios are 9.73, 11.12 and 12.26. The corresponding 10 year ratios are a bit higher at 10.00, 12.07 and 15.11. The current P/E Ratios is 16.33 based on a stock price of $129.49 and 2015 EPS estimate of $7.93. This stock price testing suggests that the stock price is relatively high. However, a P/E Ratio of 16.33 is not a high P/E Ratio on an absolute basis.
I get a Graham Price of $113.90. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.83 and 1.04. The current P/GP Ratio is 1.14 based on a stock price of $129.49. This stock price testing suggests that the stock price is relatively high.
I get a 10 year Price/Book Value per Share Ratio of 1.28. The current P/B Ratio at 2.07 is some 62% higher. The current P/B Ratio is based on a stock price of $129.49 and a Book Value per Share of $62.69. This stock price testing suggests that the stock price is relatively high.
I get 5 year median, historical average, and historical median dividend yields of 1.68%, 1.78% and 1.67%. The current dividend yield of 1.62% is 3.8%, 8.6% and 2.9% lower than these values. The current dividend yield of 1.62% is based on dividends of $2.10 per year and a stock price of $129.49. This testing suggests that the stock price is relatively reasonable.
When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform Recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month target stock price is $143.00. This implies a total return of 12.05% with 10.43% from capital gains and 1.62% from dividends.
This is an article in the Financial Post which talks about Canadian Tire getting customers to test out new products. This article on BNN talks about this company's unprofitable forays into the US market and of Targets bad results in Canada. Cameron Conway of Motley Fool gives a recent positive review of this company. And lastly, the Wall Street Journal named this company and 6 other Canadian companies as Canadian stocks to watch.
This is the second of two parts. The first part was posted on Monday, March 23, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.
Canadian Tire operates several retail businesses that offer everyday products and services through a network of over 1,700 locations across the country. The key banners that the company operates under include Canadian Tire Retail, FGL Sports, Mark's, Petroleum, Part Source, and Financial Services. Its web site is here Canadian Tire.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Post a Comment