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Home Depot Inc. (The) (HD)
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Lowe's Companies Inc. (LOW)
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Canadian Tire Corporation Limited Class A Non-Voting Shares (CTC.A)
cheers, Chris
CTC.A is now trading at 10.8x times' Forward P/E; historical averages range from 10.5x to 13.0x over the last few years. Based on consensus estimates, sales are expected to decline by -3% this year given weak consumer spending, and then normalize to around +3% going forward.
The balance sheet is quite leveraged, with net debt of $$7.6B and net debt/EBITDA is around 4.1x, Although the leverage is quite high, the dividend is quite well covered by cash flow in the trailing twelve months.
With weak consumer sentiment recently, we think growth near term would be a bit challenging.
Having said that, we think the current price would be a good entry point given it is currently trading at the lower end compared to historical averages and much lower than peers such as LOW, HD. It also has managed many prior recessions and other crisis quite well, and maintains a strong market leadership position in Canada in many categories.