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Canadian Tire Corporation, Limited Just Recorded A 24% EPS Beat: Here's What Analysts Are Forecasting Next

Investors in Canadian Tire Corporation, Limited (TSE:CTC.A) had a good week, as its shares rose 7.5% to close at CA$144 following the release of its quarterly results. It looks like a credible result overall - although revenues of CA$3.5b were what the analysts expected, Canadian Tire Corporation surprised by delivering a (statutory) profit of CA$1.38 per share, an impressive 24% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Canadian Tire Corporation

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Following last week's earnings report, Canadian Tire Corporation's nine analysts are forecasting 2024 revenues to be CA$16.7b, approximately in line with the last 12 months. Statutory earnings per share are predicted to surge 111% to CA$10.69. In the lead-up to this report, the analysts had been modelling revenues of CA$16.7b and earnings per share (EPS) of CA$15.26 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

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The consensus price target held steady at CA$155, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Canadian Tire Corporation analyst has a price target of CA$190 per share, while the most pessimistic values it at CA$130. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Canadian Tire Corporation's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.7% growth on an annualised basis. This is compared to a historical growth rate of 5.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 10% annually. Factoring in the forecast slowdown in growth, it seems obvious that Canadian Tire Corporation is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CA$155, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Canadian Tire Corporation. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Canadian Tire Corporation analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for Canadian Tire Corporation (1 is a bit concerning!) that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.