CANADIAN TIRE CORP. $103 - Toronto symbol CTC.A

CANADIAN TIRE CORP. $103 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.7 million; Market cap: $8.2 billion; Price-to-sales ratio: 0.7; Dividend yield: 1.9%; TSINetwork Rating: Above Average; www.canadiantire.ca) operates 492 Canadian Tire stores, which specialize in automotive, household and sporting goods. It also owns other retail chains, such as Mark’s (casual clothing) and SportChek.

The company is selling 20% of its credit card operations to Bank of Nova Scotia (see page 74) for $500 million. Canadian Tire has an option to sell an additional 29% to the bank over the next 10 years.

Meanwhile, Canadian Tire earned $70.6 million in the quarter ended March 29, 2014, down 3.3% from $73.0 million a year earlier. Earnings per share fell 2.2%, to $0.88 from $0.90, on fewer shares outstanding.

The decline is mainly because Canadian Tire spent more on advertising during the Winter Olympics. However, these promotions helped lift its sales by 3.8%, to $2.6 billion from $2.5 billion.

The company should earn $7.27 a share in 2014, and the stock trades at 14.2 times that forecast. The $2.00 dividend yields 1.9%.

Canadian Tire is a buy.

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