Head-To-Head Review: Canadian Tire (OTCMKTS:CDNAF) & Leon’s Furniture (OTCMKTS:LEFUF)

Canadian Tire (OTCMKTS:CDNAF) and Leon’s Furniture (OTCMKTS:LEFUF) are both consumer cyclical companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Institutional & Insider Ownership

84.6% of Leon’s Furniture shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Canadian Tire and Leon’s Furniture”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canadian Tire	$11.68 billion	0.62	$376.67 million	$4.68	29.53
Leon’s Furniture	N/A	N/A	N/A	$0.86	19.51

Canadian Tire has higher revenue and earnings than Leon’s Furniture. Leon’s Furniture is trading at a lower price-to-earnings ratio than Canadian Tire, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Canadian Tire and Leon’s Furniture, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canadian Tire	0	5	1	0	2.17
Leon’s Furniture	0	1	3	0	2.75

Canadian Tire presently has a consensus price target of $205.00, suggesting a potential upside of 48.34%. Given Canadian Tire’s higher possible upside, research analysts plainly believe Canadian Tire is more favorable than Leon’s Furniture.

Profitability

This table compares Canadian Tire and Leon’s Furniture’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canadian Tire	3.63%	10.63%	3.34%
Leon’s Furniture	N/A	N/A	N/A

Dividends

Canadian Tire pays an annual dividend of $5.30 per share and has a dividend yield of 3.8%. Leon’s Furniture pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. Canadian Tire pays out 113.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Leon’s Furniture pays out 46.4% of its earnings in the form of a dividend.

Summary

Canadian Tire beats Leon’s Furniture on 8 of the 12 factors compared between the two stocks.

About Canadian Tire

Canadian Tire Corporation, Limited provides a range of retail goods and services in Canada. It operates in three segments: Retail, CT REIT, and Financial Services. The Retail segment retails automotive maintenance products and accessories, parts, and tires, as well as automotive services and roadside assistance; electrical, hardware, home environment, paint, plumbing, and tool products; cleaning, food & drink, home décor, home essentials, home organization, kitchen, and pet care products; camping, exercise, hockey, hunting, fishing, seasonal recreation, and team sports and golf products; and backyard living, backyard fun, cycling, gardening, outdoor tools, seasonal, and toy products. This segment offers its products under the Canadian Tire, Canadian Tire Gas, Pro Hockey Life, Mark's, PartSource, Helly Hansen, Party City, and SportChek brand names. This segment also participates in loyalty programs, as well as sells its products online. The CT REIT segment operates as a closed-end real estate investment trust that holds a portfolio of properties comprising Canadian Tire stores, Canadian Tire anchored retail developments, industrial properties, mixed-use commercial property, and development properties. The Financial Services segment provides consumer credit cards, in-store financing, insurance products, and retail and broker deposits; and savings accounts and guaranteed investment certificates. Canadian Tire Corporation, Limited was founded in 1922 and is headquartered in Toronto, Canada.

About Leon’s Furniture

Leon’s Furniture Limited, together with its subsidiaries, operates as a retailer of home furnishings, mattresses, appliances, and electronics in Canada. It operates in two segments, Leon’s and The Brick. The company provides repair services for household furniture, electronics, and appliances; home office products; warranties; and credit insurance products, including life, dismemberment, disability, critical illness, and involuntary unemployment. It also operates as a commercial retailer of appliances to builders, developers, renovators, property management companies, hotels, extended care industries, landlords, government bodies, and insurance companies; and engages in the franchise operations. The company sells its products through a network of retail stores under the Leon’s, The Brick, The Brick Outlet, and The Brick Mattress Store banners; and the Brick’s Midnorthern Appliance and Appliance Canada banners, as well as through its websites, including leons.ca, thebrick.com, furniture.ca, midnorthern.com, transglobalservices.com, and applicancecanada.com. The company was formerly known as Ablan Leon Distributors Limited and changed its name to Leon’s Furniture Limited in June 1969. Leon’s Furniture Limited was founded in 1909 and is headquartered in Toronto, Canada.