Canadian Tire Corporation

The business

Operates Canadian Tire retail stores plus SportChek, Mark's, Party City and Pro Hockey Life, spanning automotive, hardlines, apparel and sporting goods.

Runs Triangle Rewards loyalty and a financial-services/credit-card arm (moving to fully own the card business after buying back Scotiabank's stake).

Family-influenced dual-class structure (Billes family); CTC.A is the widely held class.

The moat

Ubiquitous national footprint and one of Canada's most recognized retail brands with owned real estate.

Triangle loyalty program and proprietary owned brands (Motomaster, Mastercraft, NOMA) drive repeat traffic and margin.

Integrated financial-services arm captures customer credit economics that pure retailers lack.

Financial snapshot

Most recent reported period : Q1 fiscal 2026 (reported May 14, 2026); fiscal 2025 ended Jan 3, 2026. Figures reflect the review date — confirm current numbers before acting.

Free cash flow yield & sustainable growth

Free cash flow yield : ≈6.7%TTM operating cash flow C$1.29B − capex ~C$0.57B = ~C$0.72B free cash flow ÷ ~C$10.8B market cap ≈ 6.7%.

Retail revenue rose ~5% in Q1 fiscal 2026 as demand stabilized after a soft patch.

Owned brands, Triangle loyalty data, and full ownership of the credit-card business are the main earnings-recovery levers.

Capex ~C$0.57B leaves free cash flow to cover the dividend, though FCF swings with the retail and credit cycle.

See the full free-cash-flow yield ranking →

Valuation & what to watch

Simple FCF yield ~6.7% and a modest P/E of ~16.8x — a value profile versus Dollarama's growth premium.

Dividend yield ~3.55%, among the higher yields in Canadian retail.

Cheap on cash flow, but earnings are volatile (FY2025 net income fell ~41%), so the multiple reflects cyclicality.

Dividend

~C$7.30/share annually, ~3.55% yield, backed by a long multi-decade dividend-growth record; payout is well covered in normal years but leans on cyclical earnings.

Risks & the bear case

• Discretionary retail (sporting goods, apparel, seasonal) is cyclical and weather-sensitive.
• Financial-services credit losses can rise sharply in a consumer downturn.
• FY2025 earnings fell ~41%, underscoring profit volatility.
• Dual-class control limits minority shareholder influence.

Recent developments

Q1 fiscal 2026 (reported May 14, 2026) showed retail revenue up ~5% with EPS at the high end of historic norms despite weather headwinds.

Continues to internalize the financial-services/credit-card economics after buying back the Scotiabank stake.

Verdict

Canadian Tire is the value-and-yield counterweight to Dollarama within Canadian retail: ~16.8x earnings, a ~6.7% FCF yield and a 3.55% dividend backed by a long growth record. The catch is earnings volatility — FY2025 profit dropped sharply — plus exposure to consumer credit losses and discretionary cyclicality, so the cheap multiple is partly a cyclicality discount. CoinCompass is a publisher, not an investment adviser — do your own due diligence.