Canadian Tire Earnings: Lackluster Demand Remains Pertinent, but Margin Improvement Buoys Results

We do not plan to materially change our CAD 153 fair value estimate on no-moat Canadian Tire after the firm posted mixed second-quarter results. Top-line marks came in weaker than we expected but stringent cost management and lower supply chain costs helped buoy margins. We anticipate making a slight downward adjustment to our revenue forecast amid lackluster consumer demand but a modest upward adjustment to our full-year operating margin forecast, which stands around 7.5%. After rallying by a mid-single-digit percentage, shares currently trade in a range that we’d consider fairly valued.