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Highlights
- Many retail companies saw their sales numbers surge amid the holiday season, especially on Black Friday and Cyber Monday, amid relaxed COVID restrictions.
- Canadian Tire, which currently has a return on equity (ROE) of 24.84 per cent, saw its stock catapult by over 47 per cent in the past nine months.
- Costco, which has an ROE of 31 per cent, saw its scrip gain over 40 per cent in the last nine months.
Many retail companies saw their sales numbers surge amid the holiday season, especially on Black Friday and Cyber Monday, amid relaxed COVID restrictions.
In turn, many retail stocks also rallied amid positive market sentiments.
Let us look at two leading retail companies in North America and find out which could be a better investment option – Canadian Tire Corporation Limited (TSX:CTC) and Costco Wholesale Corporation (NASDAQ:COST, COST:US).
Canadian Tire Corporation Limited (TSX: CTC)
Canadian Tire Corporation is a Toronto-headquartered retailer of home products, sports equipment, apparel, accessories, footwear and automotive parts. Its stocks closed at C$ 324 apiece on Thursday, January 13.
The Canadian company recorded total retail sales of C$ 188.8 million in Q3 FY2021, denoting a year-over-year (YoY) increase of 4.3 per cent. On excluding petroleum, its third-quarter total retail sales in FY2021 reflected a YOY rise of 1.6 per cent.
Canadian Tire saw its total revenue decline by 1.8 per cent in the latest quarter to C$ 73.3 million.
The retailer reported an 18 per cent decrease in its diluted earnings to C$ 3.97 per share in Q3 FY2021 compared to the previous year.
Canadian Tire is scheduled to pay a quarterly dividend of C$ 1.3 apiece on March 1, 2022, up from C$ 1.175 paid on December 1, 2021.
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Also read: Why is Canada Goose (TSX:GOOS) stock heating up?
Costco Wholesale Corporation (NASDAQ: COST, COST:US)
Costco Wholesale Corporation is an Issaquah, Washington-headquartered warehouse company that presently owns and operates 828 stores across North America and other countries. The wholesale company allows shoppers to buy products from its warehouse at low prices.
Costco Wholesale posted net sales of US$ 49.42 million in Q1 FY2022, as compared to that of US$ 42.35 million a year ago.
The US company earned a net income of US$ 1.32 billion in the latest quarter, as compared to US$ 1.16 billion in Q1 FY2021.
Costco’s scrip closed at C$ 516.8 million on January 13.
Also read: Why Virgin Galactic stock (SPCE) sank 19%?
Bottomline
Canadian Tire, which currently has a return on equity (ROE) of 24.84 per cent, saw its stock catapult by over 47 per cent in the past nine months.
Costco, on the other hand, noted an ROE of 31 per cent and a gain over 40 per cent in the last nine months.
Both retail companies have healthy financials and stock performances that can encourage investors. However, the omicron outbreak has been causing disruptions in the retail space, which is something investors should take a note of before investing in this industry.
