DCF Studio

    CTC-A.TO · TOR · Consumer Cyclical

    Canadian Tire Corporation, Limited

    Also onConsensus Drift

    Implied value per share

    CAD 240.63

    Market price

    CAD 185.73

    Implied upside

    +29.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 240.63+29.6%
    Exit multiple
    CAD 169.37-8.8%
    Market price
    CAD 185.73

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 15.8bnCAD 15.4bnCAD 14.9bnCAD 14.5bnCAD 14.1bn-2.9%
    EBITCAD 1.4bnCAD 1.3bnCAD 1.3bnCAD 1.3bnCAD 1.2bn-2.9%
    NOPATCAD 1.0bnCAD 996.4mCAD 967.7mCAD 939.8mCAD 912.7m-2.9%
    Add depreciation & amortisationCAD 734.3mCAD 713.1mCAD 692.6mCAD 672.6mCAD 653.2m-2.9%
    Less capital expenditureCAD -644.1mCAD -625.5mCAD -607.5mCAD -590.0mCAD -573.0m-2.9%
    Less increase in working capitalCAD 161.6mCAD 156.9mCAD 152.4mCAD 148.0mCAD 143.7m+2.9%
    Free cashflow to firmCAD 1.3bnCAD 1.2bnCAD 1.2bnCAD 1.2bnCAD 1.1bn-2.9%
    Discount factor0.97030.91360.86020.81000.7626-
    Present valueCAD 1.2bnCAD 1.1bnCAD 1.0bnCAD 948.0mCAD 866.9m-8.6%
    Present Value Of The ForecastCAD 5.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.966Reported 0.949, pulled toward 1.0 (Blume)
    Cost of equity8.61%Risk-free + beta x equity risk premium
    Cost of debt4.23%Interest expense / average total debt
    Market capitalisationCAD 9.7bn55.8% of capital
    Total debtCAD 7.7bn44.2% of capital, book value as a proxy
    Tax rate25.2%Effective, capped at statutory
    WACC6.21%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCAD 240.63

    74% of EV

    Forecast FCFF, final year
    CAD 1.1bn
    Capex at depreciation, working capital in reinvestment
    CAD 989.2m
    Less reinvestment at g/ROIC (28.7% of NOPAT)
    CAD -283.8m
    Capitalised
    CAD 705.4m
    ROIC (reported)
    8.7%
    Terminal value, undiscounted
    CAD 19.5bn
    Terminal value, discounted
    CAD 14.9bn
    Enterprise value
    CAD 20.1bn
    Less net debt
    CAD 7.0bn
    Equity value
    CAD 13.1bn

    Exit at 7.7x EBITDA

    Value per shareCAD 169.37

    68% of EV

    Terminal value, undiscounted
    CAD 14.4bn
    Terminal value, discounted
    CAD 11.0bn
    Enterprise value
    CAD 16.2bn
    Less net debt
    CAD 7.0bn
    Equity value
    CAD 9.2bn

    Spread between methods: 35%.

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.21%440.27509.22618.04816.331293.94
    5.21%297.29323.86359.94412.00494.07
    6.21%214.77226.26240.62259.22284.39
    7.21%160.96165.86171.65178.63187.28
    8.21%123.02124.71126.57128.65131.02

    Outlined: this model. Green text: above today's price of 185.73. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-2.9%-7.7%-4.8pp
    EBIT margin8.7%7.2%-1.4pp
    Discount rate6.2%7.0%+0.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.