Intrinsic value of Canadian Tire Corporation Limited Class - CTC-A

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$157.78

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$157.78

 
Intrinsic value

$95.44

 
Up/down potential

-40%

 
Rating

sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CTC-A stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 11.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.27
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
Revenue, $m
  12,681
  13,099
  13,554
  14,045
  14,573
  15,139
  15,744
  16,389
  17,076
  17,804
  18,577
  19,396
  20,262
  21,178
  22,146
  23,167
  24,244
  25,380
  26,577
  27,838
  29,166
  30,564
  32,035
  33,583
  35,212
  36,925
  38,726
  40,620
  42,611
  44,703
  46,903
Variable operating expenses, $m
 
  11,932
  12,345
  12,790
  13,270
  13,783
  14,332
  14,918
  15,540
  16,202
  16,903
  17,602
  18,388
  19,219
  20,097
  21,024
  22,001
  23,032
  24,118
  25,263
  26,468
  27,737
  29,072
  30,477
  31,955
  33,509
  35,144
  36,862
  38,669
  40,568
  42,564
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  11,576
  11,932
  12,345
  12,790
  13,270
  13,783
  14,332
  14,918
  15,540
  16,202
  16,903
  17,602
  18,388
  19,219
  20,097
  21,024
  22,001
  23,032
  24,118
  25,263
  26,468
  27,737
  29,072
  30,477
  31,955
  33,509
  35,144
  36,862
  38,669
  40,568
  42,564
Operating income, $m
  1,105
  1,167
  1,209
  1,255
  1,304
  1,356
  1,412
  1,472
  1,535
  1,603
  1,674
  1,794
  1,874
  1,959
  2,049
  2,143
  2,243
  2,348
  2,459
  2,575
  2,698
  2,827
  2,964
  3,107
  3,257
  3,416
  3,583
  3,758
  3,942
  4,135
  4,339
EBITDA, $m
  1,562
  1,644
  1,701
  1,763
  1,829
  1,900
  1,976
  2,057
  2,143
  2,235
  2,332
  2,435
  2,543
  2,658
  2,780
  2,908
  3,043
  3,186
  3,336
  3,494
  3,661
  3,837
  4,021
  4,216
  4,420
  4,635
  4,861
  5,099
  5,349
  5,611
  5,888
Interest expense (income), $m
  114
  133
  144
  156
  168
  182
  197
  213
  229
  247
  266
  286
  308
  330
  354
  379
  406
  434
  463
  494
  527
  562
  598
  636
  677
  719
  763
  810
  859
  911
  966
Earnings before tax, $m
  1,011
  1,034
  1,065
  1,099
  1,135
  1,174
  1,215
  1,259
  1,306
  1,355
  1,408
  1,508
  1,567
  1,629
  1,695
  1,764
  1,837
  1,914
  1,995
  2,081
  2,171
  2,266
  2,366
  2,471
  2,581
  2,697
  2,819
  2,947
  3,082
  3,224
  3,373
Tax expense, $m
  263
  279
  288
  297
  307
  317
  328
  340
  353
  366
  380
  407
  423
  440
  458
  476
  496
  517
  539
  562
  586
  612
  639
  667
  697
  728
  761
  796
  832
  871
  911
Net income, $m
  669
  755
  778
  802
  829
  857
  887
  919
  953
  989
  1,028
  1,101
  1,144
  1,189
  1,237
  1,288
  1,341
  1,397
  1,457
  1,519
  1,585
  1,654
  1,727
  1,803
  1,884
  1,969
  2,058
  2,152
  2,250
  2,354
  2,462

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  936
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,303
  14,835
  15,350
  15,906
  16,504
  17,145
  17,831
  18,561
  19,338
  20,164
  21,039
  21,966
  22,947
  23,984
  25,080
  26,236
  27,456
  28,743
  30,098
  31,527
  33,031
  34,614
  36,280
  38,033
  39,878
  41,818
  43,857
  46,002
  48,257
  50,627
  53,117
Adjusted assets (=assets-cash), $m
  14,367
  14,835
  15,350
  15,906
  16,504
  17,145
  17,831
  18,561
  19,338
  20,164
  21,039
  21,966
  22,947
  23,984
  25,080
  26,236
  27,456
  28,743
  30,098
  31,527
  33,031
  34,614
  36,280
  38,033
  39,878
  41,818
  43,857
  46,002
  48,257
  50,627
  53,117
Revenue / Adjusted assets
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
  0.883
Average production assets, $m
  4,861
  5,017
  5,191
  5,379
  5,582
  5,798
  6,030
  6,277
  6,540
  6,819
  7,115
  7,429
  7,761
  8,111
  8,482
  8,873
  9,285
  9,721
  10,179
  10,662
  11,171
  11,706
  12,270
  12,862
  13,486
  14,142
  14,832
  15,557
  16,320
  17,121
  17,964
Working capital, $m
  3,957
  4,729
  4,893
  5,070
  5,261
  5,465
  5,684
  5,917
  6,164
  6,427
  6,706
  7,002
  7,315
  7,645
  7,995
  8,363
  8,752
  9,162
  9,594
  10,050
  10,529
  11,034
  11,565
  12,124
  12,712
  13,330
  13,980
  14,664
  15,382
  16,138
  16,932
Total debt, $m
  4,743
  4,111
  4,449
  4,813
  5,206
  5,626
  6,076
  6,555
  7,065
  7,606
  8,181
  8,789
  9,432
  10,113
  10,832
  11,590
  12,390
  13,234
  14,124
  15,060
  16,047
  17,086
  18,179
  19,329
  20,539
  21,811
  23,149
  24,556
  26,035
  27,590
  29,224
Total liabilities, $m
  10,364
  9,732
  10,070
  10,434
  10,827
  11,247
  11,697
  12,176
  12,686
  13,227
  13,802
  14,410
  15,053
  15,734
  16,453
  17,211
  18,011
  18,855
  19,745
  20,681
  21,668
  22,707
  23,800
  24,950
  26,160
  27,432
  28,770
  30,177
  31,656
  33,211
  34,845
Total equity, $m
  4,939
  5,103
  5,280
  5,472
  5,677
  5,898
  6,134
  6,385
  6,652
  6,936
  7,237
  7,556
  7,894
  8,251
  8,628
  9,025
  9,445
  9,888
  10,354
  10,845
  11,363
  11,907
  12,480
  13,083
  13,718
  14,385
  15,087
  15,825
  16,600
  17,416
  18,272
Total liabilities and equity, $m
  15,303
  14,835
  15,350
  15,906
  16,504
  17,145
  17,831
  18,561
  19,338
  20,163
  21,039
  21,966
  22,947
  23,985
  25,081
  26,236
  27,456
  28,743
  30,099
  31,526
  33,031
  34,614
  36,280
  38,033
  39,878
  41,817
  43,857
  46,002
  48,256
  50,627
  53,117
Debt-to-equity ratio
  0.960
  0.810
  0.840
  0.880
  0.920
  0.950
  0.990
  1.030
  1.060
  1.100
  1.130
  1.160
  1.190
  1.230
  1.260
  1.280
  1.310
  1.340
  1.360
  1.390
  1.410
  1.430
  1.460
  1.480
  1.500
  1.520
  1.530
  1.550
  1.570
  1.580
  1.600
Adjusted equity ratio
  0.342
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  669
  755
  778
  802
  829
  857
  887
  919
  953
  989
  1,028
  1,101
  1,144
  1,189
  1,237
  1,288
  1,341
  1,397
  1,457
  1,519
  1,585
  1,654
  1,727
  1,803
  1,884
  1,969
  2,058
  2,152
  2,250
  2,354
  2,462
Depreciation, amort., depletion, $m
  457
  477
  492
  508
  526
  544
  564
  586
  608
  632
  658
  640
  669
  699
  731
  765
  800
  838
  877
  919
  963
  1,009
  1,058
  1,109
  1,163
  1,219
  1,279
  1,341
  1,407
  1,476
  1,549
Funds from operations, $m
  397
  1,232
  1,270
  1,311
  1,354
  1,401
  1,451
  1,505
  1,561
  1,622
  1,686
  1,741
  1,813
  1,888
  1,968
  2,053
  2,142
  2,235
  2,334
  2,438
  2,548
  2,663
  2,785
  2,912
  3,047
  3,188
  3,337
  3,493
  3,657
  3,830
  4,011
Change in working capital, $m
  -589
  151
  164
  177
  191
  204
  218
  233
  248
  263
  279
  296
  313
  331
  349
  369
  389
  410
  432
  455
  479
  505
  531
  559
  588
  618
  650
  684
  719
  755
  794
Cash from operations, $m
  986
  1,153
  1,106
  1,133
  1,164
  1,197
  1,233
  1,272
  1,314
  1,359
  1,407
  1,446
  1,500
  1,558
  1,619
  1,684
  1,753
  1,825
  1,902
  1,983
  2,068
  2,158
  2,253
  2,353
  2,459
  2,570
  2,686
  2,809
  2,938
  3,074
  3,217
Maintenance CAPEX, $m
  0
  -419
  -433
  -448
  -464
  -481
  -500
  -520
  -541
  -564
  -588
  -613
  -640
  -669
  -699
  -731
  -765
  -800
  -838
  -877
  -919
  -963
  -1,009
  -1,058
  -1,109
  -1,163
  -1,219
  -1,279
  -1,341
  -1,407
  -1,476
New CAPEX, $m
  -781
  -157
  -174
  -188
  -202
  -217
  -232
  -247
  -263
  -279
  -296
  -314
  -332
  -351
  -371
  -391
  -413
  -435
  -458
  -483
  -509
  -535
  -564
  -593
  -624
  -656
  -690
  -725
  -762
  -801
  -842
Cash from investing activities, $m
  -783
  -576
  -607
  -636
  -666
  -698
  -732
  -767
  -804
  -843
  -884
  -927
  -972
  -1,020
  -1,070
  -1,122
  -1,178
  -1,235
  -1,296
  -1,360
  -1,428
  -1,498
  -1,573
  -1,651
  -1,733
  -1,819
  -1,909
  -2,004
  -2,103
  -2,208
  -2,318
Free cash flow, $m
  203
  578
  499
  498
  498
  499
  501
  505
  510
  516
  523
  519
  528
  538
  549
  562
  575
  590
  606
  623
  641
  660
  681
  703
  726
  751
  777
  805
  835
  866
  899
Issuance/(repayment) of debt, $m
  481
  304
  338
  365
  392
  421
  449
  479
  510
  541
  574
  608
  644
  680
  719
  759
  800
  844
  889
  937
  987
  1,039
  1,093
  1,150
  1,210
  1,273
  1,338
  1,407
  1,479
  1,555
  1,634
Issuance/(repurchase) of shares, $m
  -449
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -122
  304
  338
  365
  392
  421
  449
  479
  510
  541
  574
  608
  644
  680
  719
  759
  800
  844
  889
  937
  987
  1,039
  1,093
  1,150
  1,210
  1,273
  1,338
  1,407
  1,479
  1,555
  1,634
Total cash flow (excl. dividends), $m
  81
  882
  837
  863
  890
  919
  951
  984
  1,020
  1,057
  1,097
  1,127
  1,171
  1,218
  1,268
  1,320
  1,376
  1,434
  1,495
  1,559
  1,627
  1,699
  1,774
  1,853
  1,936
  2,024
  2,115
  2,212
  2,314
  2,421
  2,533
Retained Cash Flow (-), $m
  55
  -164
  -177
  -191
  -206
  -221
  -236
  -251
  -267
  -284
  -301
  -319
  -338
  -357
  -377
  -398
  -420
  -442
  -466
  -491
  -517
  -545
  -573
  -603
  -634
  -667
  -702
  -738
  -776
  -815
  -857
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  717
  660
  671
  684
  699
  715
  733
  752
  773
  796
  808
  834
  862
  891
  923
  956
  991
  1,029
  1,068
  1,110
  1,154
  1,201
  1,250
  1,302
  1,356
  1,414
  1,474
  1,538
  1,605
  1,676
Discount rate, %
 
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
 
  678
  586
  557
  528
  497
  466
  434
  402
  369
  336
  299
  268
  238
  208
  181
  155
  131
  109
  89
  72
  57
  44
  34
  25
  19
  13
  9
  6
  4
  3
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Canadian Tire Corporation, Limited provides a range of products and services through a portfolio of retail banners in Canada. Its Retail segment operates general merchandise retail tire stores with approximately 150,000 stock keeping units in living, fixing, playing, automotive, and seasonal categories under the Canadian Tire banner; a chain of 91 automotive parts specialty stores under the PartSource banner; and as a retailer of gasoline with a network of 298 retail gas bars under the Petroleum banner. As of December 31, 2015, it operated 293 convenience stores and kiosks, 83 car washes, 5 vehicle lubrication facilities, and 81 propane stations under the Canadian Tire banner. This segment also operates sporting goods and active wear retail stores under the FGL Sports banner; and 380 specialty apparel retail stores under the Mark’s banner. The company’s CT REIT segment operates a real estate investment trust that owns, develops, and leases income producing commercial properties. As of December 31, 2015, its portfolio comprised 287 properties consisting of 282 retail properties, 2 distribution centers, a mixed-use commercial property, and 2 development properties with a gross leasable area of approximately 21.5 million square feet. Its Financial Services segment markets a range of Canadian Tire-branded credit cards, including the Canadian Tire Options MasterCard, Canadian Tire Options World MasterCard, Cash Advantage MasterCard, Gas Advantage MasterCard, and Sport Chek MasterCard; various insurance and identity theft products to Canadian Tire customers; and interest savings accounts and guaranteed investment certificates. This segment also reinsures the risk associated with creditor insurance and warranty coverages purchased by Canadian Tire credit card customers, as well as accident and dismemberment insurance. The company was founded in 1922 and is based in Toronto, Canada.

FINANCIAL RATIOS  of  Canadian Tire Corporation Limited Class (CTC-A)

Valuation Ratios
P/E Ratio 16.7
Price to Sales 0.9
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 11.3
Price to Free Cash Flow 54.5
Growth Rates
Sales Growth Rate 3.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 27.8%
Cap. Spend. - 3 Yr. Gr. Rate 8.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 64.5%
Total Debt to Equity 96%
Interest Coverage 10
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 5%
Return On Total Capital 7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 13.5%
Return On Equity - 3 Yr. Avg. 13%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 34.6%
Gross Margin - 3 Yr. Avg. 33.6%
EBITDA Margin 12.5%
EBITDA Margin - 3 Yr. Avg. 12%
Operating Margin 8.7%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 8%
Pre-Tax Margin - 3 Yr. Avg. 7.7%
Net Profit Margin 5.3%
Net Profit Margin - 3 Yr. Avg. 5.2%
Effective Tax Rate 26%
Eff/ Tax Rate - 3 Yr. Avg. 26.6%
Payout Ratio 23.6%

CTC-A stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CTC-A stock intrinsic value calculation we used $12681 million for the last fiscal year's total revenue generated by Canadian Tire Corporation Limited Class . The default revenue input number comes from 2016 income statement of Canadian Tire Corporation Limited Class . You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CTC-A stock valuation model: a) initial revenue growth rate of 3.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.8%, whose default value for CTC-A is calculated based on our internal credit rating of Canadian Tire Corporation Limited Class , is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Canadian Tire Corporation Limited Class .
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CTC-A stock the variable cost ratio is equal to 91.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CTC-A stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Canadian Tire Corporation Limited Class .

Corporate tax rate of 27% is the nominal tax rate for Canadian Tire Corporation Limited Class . In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CTC-A stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CTC-A are equal to 38.3%.

Life of production assets of 11.6 years is the average useful life of capital assets used in Canadian Tire Corporation Limited Class operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CTC-A is equal to 36.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4939 million for Canadian Tire Corporation Limited Class - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 71.483 million for Canadian Tire Corporation Limited Class is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Canadian Tire Corporation Limited Class at the current share price and the inputted number of shares is $11.3 billion.


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Stock chart of CTC-A Financial statements of CTC-A
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The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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