CANADIAN TIRE CORP. $126 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.1 million; Market cap: $9.8 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.7%; TSINetwork Rating: Above Average; www.canadiantire.ca) continues to add new locations and renovate older stores. It’s also benefiting from its 2011 purchase of the Forzani Group of sporting goods stores, including the popular Sport Chek banner. These moves are helping it compete with U.S.-based retailers like Wal-Mart.
In the quarter ended September 27, 2014, Canadian Tire’s earnings rose 18.4%, to $172.2 million from $145.5 million a year earlier. Earnings per share gained 21.2%, to $2.17 from $1.79, on fewer shares outstanding.
Overall sales rose 3.9%, to $3.1 billion from $3.0 billion. Same-store sales at the 493 Canadian Tire outlets gained 3.2% on strong demand for summer goods, like garden tools and patio furniture, and automotive products and services.
Same-store sales jumped 8.5% at the company’s 429 sporting goods stores and 6.8% at the 383 Mark’s casual-clothing stores.
The gains prompted the company to raise its dividend by 5.0%. The new annual rate of $2.10 yields 1.7%.
The stock is up 29% in the past year, but it still trades at a reasonable 16.8 times the company’s projected 2014 earnings of $7.50 a share.
Canadian Tire is a buy.
