# Canadian Tire (CTC.A)



## FrugalTrader (Oct 13, 2008)

What do you guys think of Canadian Tire as an investment? What about Canadian Tire acquiring Forzani (SportsChek and Sports Experts)?

I just took a peek at the financial statemnents, and it appears that:

-current price: $61.95
-revenue growth as been pretty flat over the past few years
-p/e ratio of 10.5
-p/b ratio of 1.17
-$6 cash/share on the balance sheet ($750M)
-manageable long term debt (~$1.08B)
-cash flow positive (net income + depreciation/amortization-capex) over the past 3 years (maybe longer).
-do not appear to dilute shares


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## Echo (Apr 1, 2011)

I think Canadian Tire is going to be facing some stiff competition when Target and other American retailers enter the market in 2013. The Forzani buy gives them more brands with a stronger presence in the sports niche and hopefully helps them weather the coming storm.

They've always had pretty strong fundamentals even though the revenue growth isn't huge. They also just had a nice dividend increase. Overall it looks like a good value right now.

Here's an interesting article about the Canadian retailer's ability to handle the coming American invasion - http://money.canoe.ca/money/business/canada/archives/2011/04/20110419-160711.html


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## KaeJS (Sep 28, 2010)

Solid and Boring -- but that could be exactly what you're looking for.

The dividend is not high enough for me and I don't think acquiring Forzani will break barriers. 

What I do like about it, though, is the fact that before they acquired Forzani, it managed to hit almost $69/share in Dec/Jan. Now, with Forzani, why couldn't that happen again?


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## Sampson (Apr 3, 2009)

I think I'm kicking myself for not buying Forzani's when it was at $12. Man...

Truthfully, I don't like either...

Canadian Tire needs to go through some serious restructuring, they remind me of Loblaws a couple of years ago when they were trying to branch out into home products etc.

I remember hearing the crappy tire was considering selling groceries.

I don't think there's any potential in these large, do-everything retailers. You just know that these companies won't be able to do anything spectacular to improve either profit or grow revenues, Canadian market is also already saturated, and I doubt they would be able to make any in-roads internationally so where's the growth going to come from?

I think most agree, hence the seemingly fabulous fundamentals.


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## Cal (Jun 17, 2009)

KaeJS said:


> Solid and Boring -- but that could be exactly what you're looking for.
> 
> The dividend is not high enough for me and I don't think acquiring Forzani will break barriers.


Same.


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## davext (Apr 11, 2010)

The boat sailed away a long time ago on this one and I missed it.

I think Canadian Tire was ahead of the curve and was able to generate a lot of sales by buying from China... All sorts of merchandise that were mediocre to decent in quality but sold well. 

Now there's nothing I see that would trigger much growth and competition is stiff. 

Dividend is too low too just like everyone else is saying.


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## newfoundlander61 (Feb 6, 2011)

CTC.A dropped pretty good today, I have been to their stores recently and they are always busy so the next quarter they report will likely be much better than the one they just reported provided of course COVID stays stable.


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## like_to_retire (Oct 9, 2016)

Yeah, the store itself, along with its on-line presence did fine, it's just that coronavirus-led closures, of Mark's, Sport Chek and Helly Hensen stores, hit the company's retail segment pretty hard. With these stores shut down it affected the bottom line.

They'll be fine..........

ltr


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## MrBlackhill (Jun 10, 2020)

I bought it on April 15th at 93$ and sold it on June 3rd at 125$. I think the remaining recovery will take more time, but I agree that Q3 should help... same being said for all the stocks out there.

Same for DOO.TO. I bought at 27$ on April 15th and was tempted to sell 2 weeks later when it was at 43$. Again, around June 3rd it was at 54$ and since then it hasn't moved much. I'm still holding it because I have a very, very small position... I wish it was a bigger position.

Q3 of CTC should help it jump a bit, because what helped DOO.TO was everybody buying recreational vehicles, so I guess everybody is also buying a lot of outdoor equipment, gardening equipment, etc. at CTC because they can't travel so they put that money into camping, outdoor recreation, home & garden improvement, pool & deck improvement, etc. Look at Home Depot (HD on the US side), they are thriving.

I think many stocks had a V-recovery from April to June and since then they are more cautiously going back to pre-COVID levels, but that may take half a year or until a vaccine announcement gets people to be bullish. Q3 should help a bit, also.


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## MrMatt (Dec 21, 2011)

like_to_retire said:


> Yeah, the store itself, along with its on-line presence did fine, it's just that coronavirus-led closures, of Mark's, Sport Chek and Helly Hensen stores, hit the company's retail segment pretty hard. With these stores shut down it affected the bottom line.
> 
> They'll be fine..........
> 
> ltr


I'd like to be positive on that, but their online stores are a disaster.
Sportchek and National Sports are pretty bad, but the main CanadianTire website is atrocious. It's barely usable.

They've had years, they're a major company, the fact that they still can't seem to figure out how to run an online store suggests a longstanding management failure.
Lots of plusses, but bad management can sink a good company.
I'm not desperate enough with a lack of places to put my money to bet on poor/incompetent management.


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## Ponderling (Mar 1, 2013)

I use it as a stock that, like grocery store, are recession survivors. Every medium sized town in the country has a ctc store nearby. The online is not a huge thing in these markets at present, I surmise.


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## AltaRed (Jun 8, 2009)

Ponderling said:


> I use it as a stock that, like grocery store, are recession survivors. Every medium sized town in the country has a ctc store nearby. The online is not a huge thing in these markets at present, I surmise.


Probably true but an enterprise that large is embarassing not to have a solid e-commerce platform. Further, CT's D/E ratio of >1.5 is a far cry from its historical <1.0. I think it is vulnerable to economic headwinds, meaning it does not have much flexibility to make strategic capital investments.


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## agent99 (Sep 11, 2013)

MrMatt said:


> I'd like to be positive on that, but their online stores are a disaster.
> Sportchek and National Sports are pretty bad, but the main CanadianTire website is atrocious. It's barely usable.
> 
> They've had years, they're a major company, the fact that they still can't seem to figure out how to run an online store suggests a longstanding management failure.
> ...


I agree with that. I had their rewards card for years. Then they wanted me to upgrade it to the Triangle card. I did that. Now, I am unable to log in to their website. I jumped through numerous hoops, spoke to several agents, but they never could help me to get it to work. I can still collect rewards when I buy in store, but have totally given up on buying from them on-line.

They do a lot of things wrong, but they get away with it because there is just not much competition for them in some sectors. 

I continue to buy there, but not investing in CTC!


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## MrMatt (Dec 21, 2011)

AltaRed said:


> Probably true but an enterprise that large is embarassing not to have a solid e-commerce platform. Further, CT's D/E ratio of >1.5 is a far cry from its historical <1.0. I think it is vulnerable to economic headwinds, meaning it does not have much flexibility to make strategic capital investments.


Honestly they could just go and have Shopify run it.

I remember back when Bestbuy bought futureshop, one of the important parts was their ecommerce platform.

I'm finding I buy most stuff online now, it's just not worth the 30minutes-1hr of messing around. Go online and have them ship it for a few bucks, or have it ready and I'll pick it up at the door.


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## AltaRed (Jun 8, 2009)

MrMatt said:


> I'm finding I buy most stuff online now, it's just not worth the 30minutes-1hr of messing around. Go online and have them ship it for a few bucks, or have it ready and I'll pick it up at the door.


Never mind the stores I typically go into are the junkiest, most tired, narrow aisled, places I have ever gone into. There is no 'shopping experience' in a CT store.


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## MrMatt (Dec 21, 2011)

AltaRed said:


> Never mind the stores I typically go into are the junkiest, most tired, narrow aisled, places I have ever gone into. There is no 'shopping experience' in a CT store.


It's just a bad experience.

They used to have wide aisles here, but then they started dropping skids in the middle so it's very cramped.

If their pickup system wasn't so broken, I'd use that all the time.


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## like_to_retire (Oct 9, 2016)

MrMatt said:


> It's just a bad experience.


Yeah, maybe, but I always go there for so many things I need, and so does everyone else. It's a tradition. There's money to be made in traditions.

I agree, they need to hand their online situation over to Shopify and they need to work on their stores.

But, from an investment position, I've had CTC-A for the last 10 years as one of my Consumer Discretionary stocks and I like that they keep an affordable dividend of about 3.5% and have a total return of around 200% in 10 years which is a CAGR of 11.5%. How bad is their total return compared to the index over 10 years? I care about investing, not whether I like the store or not.....











ltr


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## AltaRed (Jun 8, 2009)

It has had a good growth pattern until it got into acquisition mode, stumbled on their buys and increased their D/E ratio. It is not the same company the past 2 years as it was previously.....and the chart shows it. I decided to walk from my CTC shares primarily due to more leveraged balance sheet.


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## agent99 (Sep 11, 2013)

AltaRed said:


> There is no 'shopping experience' in a CT store.


Oh, I don't know. They offer an ever changing experience at our stores. 
Just when you think you know where things are, they move them all around. 
Then you have to search and I guess, in process, see some other things you didn't know you needed.


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## MrMatt (Dec 21, 2011)

like_to_retire said:


> Yeah, maybe, but I always go there for so many things I need, and so does everyone else. It's a tradition. There's money to be made in traditions.
> 
> I agree, they need to hand their online situation over to Shopify and they need to work on their stores.
> 
> ...


Well I care about investing, I invest in a lot of companies I don't buy.
Apple has been great, but their products are quite horrible for my use case.
But they have happy customers, and they execute according to their vision.

The issue I have with CTC is that the persistent failure to execute, that's a huge red flag.
Either management is incompetent << don't invest.
Or they don't think online is important, and maybe today it isn't, but to me it is a warning sign that management isn't looking forward. Without vision it's management, not leadership.


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## Gator13 (Jan 5, 2020)

Any comments on CRT.UN? I have had a very small position in our TFSA's for a few years and it has held up well on top of ~ 5.5% payout.


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## Ponderling (Mar 1, 2013)

I useCTC.as a consumer staple type holding. Hell, one in every reasonably sized town. People who shop there are not as fickle about e commerce, which is good, because ctc we way slow to get e commerce going prior to covid coming to town.


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## newfoundlander61 (Feb 6, 2011)

Canadian Tire closing all National Sports stores amid higher-than-expected revenues.

Canadian Tire closing all National Sports stores amid higher-than-expected revenues - BNN Bloomberg


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## MrMatt (Dec 21, 2011)

newfoundlander61 said:


> Canadian Tire closing all National Sports stores amid higher-than-expected revenues.
> 
> Canadian Tire closing all National Sports stores amid higher-than-expected revenues - BNN Bloomberg


Damn, I really liked National Sports, but it was clear that they were considered Second tier after Sportchek


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## Ponderling (Mar 1, 2013)

I was wondering why it popped up today. 

The car always accelerates a bit better when you unload the golf clubs from the trunk considering that you have not played the game in over year.

Or the stinky hockey bag back there as well.


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