What you need to know about Canadian Tire’s Q2 report

As Canadian Tire prepares its earnings result, the majority of analysts say the company's stock is undervalued.

(Jonathan Hayward/CP)

(Jonathan Hayward/CP)

The multi-purpose retailer announced its second quarter results on Thursday before the market opened. Here’s what you need to know:

In a nutshell:

Retail sales were in good shape in the second quarter, with same-store sales rising for Canadian Tire, Mark’s, FGL Sports and Sport Chek. The drag in Q2 was Canadian Tire’s gas stations, where lowered gas prices drove down that segment’s revenue more than 13% compared to a year ago. “Canadian Tire is operationally stronger than a year ago, but our solid sales and productivity gains are masked by the dramatic fall of the Canadian dollar and impacted by certain one time items that benefitted us in 2014,” CEO Michael Medline said in a press release. Earnings per share for the quarter was $2.15, coming in below analysts’ predictions.

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Analysts are saying:

Consensus prediction, EPS: $2.20
Consensus target price: $146.77
Closing price yesterday: $132.17
What they advise: Buy: 12 Hold: Sell: 1 

Good news recently:

The company has said it’s focused on improving its product offerings and investing in its digital and e-commerce operations. In May, Canadian Tire acquired 12 former Target locations.

Bad news recently:

The depreciating loonie and economic slowdown in Alberta are challenges. Management has indicated that sales in Alberta are starting to slow down.

Trailing 12-month stock performance:

Trailing 12-month stock chart of Canadian Tire