No Change to Outlook as Canadian Tire Reports Solid Earnings; Shares Fairly Valued
We do not expect to materially alter our CAD 140 per share valuation for no-moat Canadian Tire after it reported second-quarter earnings. The firm saw 4% revenue growth against 70 basis points of operating margin expansion, versus our 6% and 50-basis-point marks for 2017. Our long-term forecast, calling for 4% top-line growth and operating margin expansion to around 10% (from 2016’s 8.7%) remain intact, and we contend the shares are trading near their fair value.Retail revenue lags our full-yea...
Canadian Tire Corporation comprises three main business operations, which provides a range of retail goods and services. Co.'s three main business operations are: Retail, which is conducted through a number of banners, including Canadian Tire, Canadian Tire Gas (Petroleum), Mark's, PartSource, and various FGL Sports banners; CT REIT, which is a real estate investment trust engaged in owning, developing and leasing commercial properties; as well as Financial Services, which markets a range of Canadian Tire-branded credit cards, insurance and warranty products and processes credit card transactions with respect to purchases made in Canadian Tire associate stores and Petroleum outlets.
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