March 7, 2024
Top 10 Stock Canadian Tire Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Canadian Tire – Top 10 Stock in Toronto Stock Exchange Index TSX Composite
corp.canadiantire.caEnglishhomedefault.aspx
Canadian Tire is listed as a top 10 stock on March 07, 2024 in the market index TSX Composite because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 42 (42% performer), Obermatt assesses an overall hold recommendation for Canadian Tire on March 07, 2024.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | General Merchandise Stores |
| Index | TSX Composite |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Canadian Tire Hold
| 360 METRICS | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 86 |
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| GROWTH | ||||||||
| GROWTH | 38 |
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| SAFETY | ||||||||
| SAFETY | 52 |
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| SENTIMENT | ||||||||
| SENTIMENT | 14 |
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| 360° VIEW | ||||||||
| 360° VIEW | 42 |
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ANALYSIS: With an Obermatt 360° View of 42 (better than 42% compared with alternatives), overall professional sentiment and financial characteristics for the stock Canadian Tire are below the industry average. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Canadian Tire. The consolidated Value Rank has an attractive rank of 86, which means that the share price of Canadian Tire is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 86% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 52. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 14. Professional investors are more confident in 86% other stocks. The consolidated Growth Rank also has a low rank of 38, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 62 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 42, Canadian Tire is worse than 58% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 86), and the financing structure is on the safer side (Safety Rank of 52). However, sentiment in the professional investor community is below-average (Sentiment Rank of 14), as is the growth momentum for the company (Growth Rank of 38). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Canadian Tire negative
ANALYSIS: With an Obermatt Sentiment Rank of 14 (better than 14% compared with alternatives), overall professional sentiment and engagement for the stock Canadian Tire is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for Canadian Tire. Analyst Opinions are at a rank of 31 (worse than 69% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 8, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 12, which means that professional investors hold less stock in this company than in 88% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Canadian Tire is Market Pulse, with a rank of 66, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 66% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 14 (less encouraging than 86% compared with investment alternatives), Canadian Tire has a reputation among professional investors that is far below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Canadian Tire Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 86 (better than 86% compared with alternatives) for 2024, Canadian Tire shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Canadian Tire. Price-to-Sales is 51 which means that the stock price compared with what market professionals expect for future sales is lower than for 51% of comparable companies, indicating a good value for Canadian Tire's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 64% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 61. Compared with other companies in the same industry, dividend yields of Canadian Tire are expected to be higher than for 98% of all competitors (a Dividend Yield rank of 98). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 86, is a buy recommendation based on Canadian Tire's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Canadian Tire based on its detailed value metrics.
Growth Strategy: Canadian Tire Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 38 (better than 38% compared with alternatives), Canadian Tire shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for Canadian Tire. While Sales Growth ranks at 51, professionals currently expect the company to grow more than 51% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 26, which means that, currently, professionals expect the company to grow its profits less than 74% of its competitors, and Capital Growth has a low rank of 44. Historic stock returns were also below average with a current Stock Returns rank of 38 which means that the stock returns have recently been below 62% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 38, is a hold recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more
Safety Strategy: Canadian Tire Debt Financing Safety above-average
| SAFETY METRICS | March 7, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 30 |
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| REFINANCING | ||||||||
| REFINANCING | 84 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 44 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 52 |
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ANALYSIS: With an Obermatt Safety Rank of 52 (better than 52% compared with alternatives), the company Canadian Tire has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Canadian Tire is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Canadian Tire and the other two below average. Refinancing is at 84, meaning the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 84% of its competitors. But Leverage is high with a rank of 30, meaning the company has an above-average debt-to-equity ratio. It has more debt than 70% of its competitors. Liquidity is also on the riskier side with a rank of 44, meaning the company generates less profit to service its debt than 56% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 52 (better than 52% compared with alternatives), Canadian Tire has a financing structure that is safer than that of its competitors. A good Refinancing Rank means that the problems of the company may not be around the corner. But high Leverage is only good if things go well, and low Liquidity is a signal for caution. The financing signals for Canadian Tire are on the riskier side, requiring the company's future to be on the safer side. Investors may want to look at Growth and Sentiment ranks before making an investment decision. ...read more
Combined financial peformance: Canadian Tire Above-Average Financial Performance
| COMBINED PERFORMANCE | March 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 86 |
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| GROWTH | ||||||||
| GROWTH | 38 |
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| SAFETY | ||||||||
| SAFETY | 44 |
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| COMBINED | ||||||||
| COMBINED | 74 |
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ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), Canadian Tire (General Merchandise Stores, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of Canadian Tire are a good value (attractively priced) with a consolidated Value Rank of 86 (better than 86% of alternatives), are safely financed (Safety Rank of 52, which means low debt burdens), but show below-average growth (Growth Rank of 38). ...read more
RECOMMENDATION: A Combined Rank of 74, is a buy recommendation based on Canadian Tire's financial characteristics. As the company Canadian Tire's key financial metrics exhibit good value (Obermatt Value Rank of 86) but low growth (Obermatt Growth Rank of 38) while being safely financed (Obermatt Safety Rank of 52), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 86% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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