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.
When I was updating my spreadsheet, I noticed I have done well investing in this stock. I have held it for 20 years and my total return is 12.09% per year with 10.09% per year from capital gains and 2.00% from dividends. However, this stock has not done well recently and stock price has gone down the last two years. The 5 year total return is just 4.90% with 2.66% from capital gains and 2.24% from dividends.
The dividend yields are low to moderate with dividend growth good. The current dividend is moderate (2% to 4% ranges). The current dividend is 4.72%. The 5, 10 and historical dividend yields are 1.91%, 1.74% and 1.70%. The dividends in the past were lower. The current dividend growth is good because it is over 15% per year with the last 5 years are 17.22% per year. However, the last increase was lower for 2020 at 9.6%. That puts it into the moderate range.
The Dividend Payout Ratios are fine. The DPR for EPS for 2019 was 33% with 5 year coverage at 29%. The DPR for CFPS for 2019 was 12% with 5 year coverage at 13%. The DPR for Free Cash Flow (using market Watch and WSJ) the ratio is 37% with 5 year coverage at 53%. The Dividend Coverage Ratio for 2019 is 2.68. Both Market Watch and WSJ has much higher FCF than Morningstar. Differing FCF from different sites is a continuing problem with FCF
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is fine at 0.66. The Liquidity Ratio is good at 1.66. The Debt Ratio is low at 1.39 and I prefer it to be 1.50. The Leverage and Debt/Equity Ratios are a little high at 3.55 and 2.55.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 17.22% | 4.90% | 2.66% | 2.24% |
| 2009 | 10 | 17.32% | 11.53% | 9.30% | 2.22% |
| 2004 | 15 | 15.15% | 7.93% | 6.27% | 1.66% |
| 1999 | 20 | 12.41% | 8.84% | 7.27% | 1.57% |
| 1994 | 25 | 9.81% | 11.89% | 9.81% | 2.08% |
| 1990 | 29 | 8.59% | 7.68% | 6.27% | 1.41% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.65, 14.27 and 15.67. The corresponding 10 year ratios are 10.85, 12.59 and 14.70. The corresponding historical ratios are 10.45, 13.63 and 15.66. The current P/E Ratio is 6.65 based on a stock price of $96.44 and 2020 EPS estimate of $13.60. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $148.87. The 10 year low, median, and high median Price/Graham Price Ratios are 0.88, 1.00 and 1.11. The current P/GP Ratio is 0.65 based on a stock price of $96.44. 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 1.75. The current P/B Ratio is 1.33 based on a Book Value of $4,456M, Book Value per Share $72.45 and a stock price of $96.44. The current ratio is 24% below the 10 year 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 4.72% based on dividends of $4.55 and a stock price of $96.44. The current yield is 178% above the historical one. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 1.74%. The current dividend yield is 4.72% based on dividends of $4.55 and a stock price of $96.44. The current yield is 171% above the 10 year one. 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 P/S Ratio is 0.39 based on 2020 Revenue estimate of $15,322M, Revenue per Share of $249.06 and a stock price of $96.44. The current ratio is 40% below the 10 year 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. All the testing points to this. The current stock price has lost 31% since the end of last year. This stock has fall in the bear market.
Is it a good company at a reasonable price? I have done very well with this stock and I plan to hold on to my shares, although I probably will not buy more because of its weighting in my portfolio. Some people have been preaching its demise because of Amazon and online buying, but Amazon and online buying will probably no take over everything. The company is also getting into online buying. The stock is cheap at present.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5), Hold (3) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $168.36. This implies a total return of 79.29% with 74.57% from capital gains and 4.72% from dividends. (But who knows when this bear market will be over with.)
See what analysts are saying on Stock Chase. Very different opinions on this company, some are positive and some are not. Daniel Da Costa on Motley Fool thinks this stock is extremely attractive after the recent sell off. A writer on Simply Wall Street says earnings are growing faster than stock price. A writer on Simply Wall Street says dividends are not well covered by cash flow, but I did not see that, but there are different ways of calculating Cash Flow. CTC appoints a new CEO says Business News. Reuters via Financial Post says the company beat recent quarterly profits estimates.
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 workwear 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). Its web site is here Canadian Tire Corp.
The last stock I wrote about was about was H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF) ... learn more. The next stock I will write about will be Enbridge Inc (TSX-ENB, NYSE-ENB) ... learn more on Monday, March 16, 2020 around 5 pm.
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.
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