Bullboard - Stock Discussion Forum Canadian Tire Ord Shs CDNAF

Primary Symbol: T.CTC Alternate Symbol(s): T.CTC.A | CDNTF

Canadian Tire Corporation, Limited is a Canada-based retail goods and services provider. It operates through three segments: Retail, Financial Services, and CT REIT. The Retail segment is conducted under a number of banners, including Canadian Tire, Canadian Tire Gas+ (Petroleum), Mark’s, PartSource, Helly Hansen, Party City in Canada, and various SportChek banners. The Financial Services... see more

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TSX:CTC - Post Discussion

Canadian Tire Ord Shs > TD

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Post by retiredcf on Feb 19, 2021 9:33am

TD

Canadian Tire Corporation, Ltd.

(CTC.A-T) C$175.78

Q4/20 Results - Growth Pillars Starting to Accelerate Event

Yesterday morning, Canadian Tire (CTC) reported Q4/20 Adjusted EPS of $8.40, which was well ahead of our forecast/consensus of $6.80/$6.77.

Impact: POSITIVE

Q4/20 Summary: The Q4/20 beat was driven by two factors relative to our forecast. The first, a better-than-anticipated Retail gross margin, and the second, lower impairments and a lower allowance provision in the Financial Services (FS) portfolio, resulting in a lower-than-forecast re-measurement expense. While impressed by the earnings outperformance, we are equally excited by the acceleration of its Retail growth drivers that include heightened eCommerce penetration, material growth in its private label portfolio, and a significant increase in its Triangle loyalty membership. These results further support our growth outlook for both segments continuing over our forecast horizon.
Retail Outlook: Despite CTR facing a strong comparable period in 2021, we forecast Retail EBT growth to continue as Mark's and SportChek face relatively weak comparable periods. This should be further aided by the growth drivers noted above, a lower amount of one-time items flowing through continuing operations, and further benefits from its cost optimization program.
FS Outlook: Credit metrics continue to remain stable if not illustrating signs of improvement recently. Although management continues to take a prudent approach to the potential for a rise in future net write-offs, we believe that this is likely to prove conservative. As progress toward a resolution on the pandemic becomes clearer and a shift toward account growth commences, we anticipate the allowance provision to gradually move toward its targeted range (11.5-13.5%) and be a key contributor to improved financial performance.
Investment Outlook: While some investors voice concern of the impact of the economy reopening on CTR, we believe that the Retail business model has never been stronger and remains positioned to grow on a measured basis. Combine this with our view of an improved outlook for the FS segment, a strong balance sheet that is likely to heighten capital returns to shareholders, and a valuation that remains compelling and we maintain our BUY recommendation.

TD Investment Conclusion

We maintain our BUY recommendation and $210.00 target price.