Is it a good company at a reasonable price? I have done well with this company and I think it is a good it a good consumer stock to own. MoneySense gives it a C rating. Analysts seem to only have strong buys when a stock has a climbing stock price, not when a stock price is down. I think you should buy a stock when it is down. Unfortunately, I am generally fully invested so I do not have much money for new purchases. The results of my stock price testings says that the stock price on this stock is relatively cheap.
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 had this stock for just over 24 years and I have made a number of purchases since my first buy in 2000. I have made a total return of 11.28% per year with 8.69% from capital gains and 2.59% from dividends.
The company said that sales and profit was down due to softening of consumer demand and unseasonable weather in Q4. They are a consumer stock and they have had an off year. It happens. The company still increased their dividends in 2024, but at a minimal amount of 1.45%. Doing this keeps a company on the Dividend Aristocrat list.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over the next year. This chart shows that they had a bad year for net income in 2023, but net income is expected to growth this year.
| Year | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 18.48% | 3.45% | -1.08% | <-12 mths |
| 5 | AEPS Growth | -13.22% | -2.80% | -3.18% | <-12 mths |
| 5 | Net Income Growth | -69.18% | -20.98% | 10.85% | <-12 mths |
| 5 | Cash Flow Growth | 67.66% | 10.89% | ||
| 5 | CF Growth excl WC | 51.50% | 8.66% | ||
| 5 | Dividend Growth | 91.67% | 13.90% | 1.45% | <-12 mths |
| 5 | Stock Price Growth | -1.42% | -0.28% | -3.11% | <-12 mths |
| 10 | Revenue Growth | 41.33% | 3.52% | 0.77% | <-this year |
| 10 | AEPS Growth | 47.72% | 3.98% | 8.00% | <-this year |
| 10 | Net Income Growth | -61.99% | -9.22% | 238.96% | <-this year |
| 10 | Cash Flow Growth | 51.56% | 4.25% | 20.80% | <-this year |
| 10 | CF Growth excl WC | 49.66% | 4.11% | -8.75% | <-this year |
| 10 | Dividend Growth | 392.86% | 17.29% | 1.99% | <-this year |
| 10 | Stock Price Growth | 41.44% | 3.53% | -3.11% | <-this year |
The current dividend yield is good with dividend growth moderate. The current dividend yield is good (5% to 6% ranges) at 5.37%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 3.53% and 2.37%. The historical dividend yield is low (below 2%) at 1.70%. The dividend growth is moderate (8% to 14% per year) at 13.9% per year over the past 5 years. The last dividend increase was in 2024 and it was for only 1.45%.
The Dividend Payout Ratios (DPR) are good, but 2023 being an off year. The DPR for 2023 for Earnings per Share (EPS) are too high for at 183% with 5 year coverage at good at 41%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is fine at 54% with 5 year coverage is good at 31%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 21% with 5 year coverage at 15%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 53% with 5 year coverage good at 37%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 182.54% | 40.53% |
| AEPS | 54.18% | 30.83% |
| CFPS | 21.42% | 14.50% |
| FCF | 52.67% | 37.21% |
Debt Ratios show that the company currently has too much debt and some ratios need to be improved. The Long Term Debt/Market Cap Ratio for 2023 is fine at 0.60 and currently at 0.62. The Liquidity Ratio for 2023 is good at 1.77. The Debt Ratio for 2023 is too low at 1.41 and I would prefer it to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.41 and 2.41. I prefer them to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.60 | 0.62 |
| Intang/GW | 0.27 | 0.28 |
| Liquidity | 1.77 | 1.77 |
| Liq. + CF | 1.92 | 1.96 |
| Debt Ratio | 1.41 | 1.41 |
| Leverage | 3.41 | 3.41 |
| D/E Ratio | 2.41 | 2.41 |
The Total Return per year is shown below for years of 5 to 35 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 13.90% | 3.37% | -0.28% | 3.66% |
| 2013 | 10 | 17.29% | 6.65% | 3.53% | 3.12% |
| 2008 | 15 | 15.07% | 11.34% | 8.15% | 3.19% |
| 2003 | 20 | 15.30% | 9.05% | 6.57% | 2.48% |
| 1998 | 25 | 12.07% | 6.97% | 5.06% | 1.91% |
| 1993 | 30 | 9.96% | 11.26% | 8.55% | 2.71% |
| 1988 | 35 | 10.07% | 8.25% | 6.25% | 2.01% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.86, 10.22 and 12.30. The corresponding 10 year ratios are 11.80, 13.66 and 15.25. The corresponding historical ratios are 10.45, 13.06 and 14.84. The current P/E Ratio is 8.55 based on a stock price of $130.43 and EPS estimate for 2024 of $15.26. The current ratio is below the low ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
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 11.40, 13.21 and 15.03. The current P/AEPS Ratio is 11.65 based on AEPS estimate for 2024 of $11.20 and a stock price of $130.43. 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 get a Graham Price of $158.54. The 10-year low, median, and high median Price/Graham Price Ratios are 0.88, 1.02 and 1.17. The current P/GP Ratio is 0.82 based on a stock price of $130.43. The current 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 1.80. The current P/B Ratio is 1.31 based on Book Value of $5,548M, Book Value per Share of $99.75 and a stock price of $130.43. The current ratio is 27% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2024 of $102.00. This BVPS implies a ratio of 1.28 with a stock price of $130.43 and Book Value of $5,573M. This ratio is 29% 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 8.96. The current P/CF Ratio is 4.44 based on Cash Flow per Share estimate for 2024 of $29.40, Cash Flow of $1,653M and a stock price of $130.43. The current ratio is 50% 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 5.37% based on dividends of $7.00 and a stock price of $130.43. The current yield is 216% 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 2.37%. The current dividend yield is 5.37% based on dividends of $7.00 and a stock price of $130.43. The current yield is 126% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.68. The current P/S Ratio is 0.43 based on Revenue estimate for 2024 of $16,784M, Revenue per Share of $301.76 and a stock price of $130.43. The current ratio is 37% 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. Both the historical and 10 year dividend yield tests say that the stock price is cheap. It is confirmed by the P/S Ratio test that says the stock price is relatively cheap. Most of the rest of the testing is saying that the stock price is relatively cheap.
When I look at analysts’ recommendations, 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.
For 2024 on Stock Chase there is a buy recommendation and a Do Not Buy recommendation. The second analysts does not like consumer stocks. Stock Chase gives this stock 3 stars out of 5. It is on the dividend lists that I follow. Demetris Afxentiou on Motley Fool says this is a great stock selling at a discount. Daniel Da Costa on Motley Fool says buy for long term growth. The company put out a Press Release about its fourth quarter results for 2023.
Simply Wall Street via Yahoo Finance review this stock. Simply Wall Street is showing 4 warnings of debt is not well covered by operating cash flow; profit margins (1.3%) are lower than last year (5.9%); dividend of 5.31% is not well covered by earnings; and large one-off items impacting financial results. Simply Wall Street gives this stock 3 and one half stars out of 5.
Canadian Tire sells home goods, sporting equipment, apparel, footwear, automotive parts and accessories, and vehicle fuel through a roughly 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, Party City, Atmosphere, and PartSource monikers. Additionally, the company owns Helly Hansen, a Norwegian sportswear and workwear brand, and 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%). 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 Wednesday, March 20, 2024 around 5 pm. Tomorrow on my other blog I will write about Globe’s Dividend All-Stars.... learn more on Tuesday, March 19, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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