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Third-quarter earnings season was a challenging one, with many companies reporting financial results that failed to impress investors, and it looks as if the fourth-quarter earnings could be another obstacle course for investors to navigate.

As we head into the fourth-quarter earnings season, it may be helpful for investors to look back at the third quarter to see which stocks delivered strong positive price moves and which ones delivered large losses. This may be a good reference point to start from when trying to assess upcoming corporate earnings.

Using Bloomberg as my source, and looking at stocks in the S&P/TSX composite index, excluding the energy and materials sectors, 53 per cent of stocks in the S&P/TSX experienced declines in their stock prices after they reported their quarterly results. (If the company reports before the market opens, the price move is based on that day's performance; if it reports after the close, the price reaction is based on the following day's price move.)

Weakness may have been sparked by a company missing the Street's expectations, management providing weak guidance, or negative news. Overall, it was a struggle for investors to avoid "torpedo," or falling, stocks and preserve their capital – let alone make money.

Looking at eight of the 10 sectors in the S&P/TSX composite, the non-resource sectors with the highest percentage of stocks with positive price moves after reporting were the telecom, information technology, consumer staples and health care sectors. The lack of sector leaders suggests that we are in a stock pickers' market.

The telecom sector had the highest percentage of stocks that rallied after corporate earnings were released. Within the telecom sector, three of the four stocks closed higher, Rogers Communications being the top performer with its share price appreciating over 5 per cent. On the flip side, Telus was the lone laggard with the company announcing 1,500 jobs layoffs and the stock price falling 4 per cent. The stock price has not recovered as in December, news that Shaw Communications' plans to acquire WIND Mobile was another dose of disappointment for Telus's shareholders given the potential for competition to heat up in Western Canada.

The information technology sector had the second-highest percentage of stocks with positive price changes at 62 per cent. The top performers were Mitel, BlackBerry, Enghouse, and Kinaxis with share prices advancing 15 per cent, 10 per cent, 9 per cent and 7 per cent, respectively. For 2016, the technology stock with the highest forecasted return is Mitel. All seven analysts covering the stock have buy recommendations with an average one-year price target of $17.45, implying a potential return of more than 80 per cent. The Street is forecasting the company's earnings to grow 28 per cent to 87 cents (U.S.) in 2016 from 68 cents expected in 2015, yet the stock is trading at a price-to-earnings multiple of under eight times the consensus 2016 earnings estimate. A recent acquisition is anticipated to expand the company's margins and drive its growth.

The consumer staples sector had six stocks out of the 10 in the sector with positive price changes; however, the gains were muted. Leaders included Loblaw and George Weston.

Turning to the health care sector, three of the five companies rallied, led by shares of Concordia Healthcare, which rallied 16 per cent, ProMetic Life Sciences with a 3 per cent increase, and Extendicare also jumped 3 per cent.

Now, for the sectors with the highest percentage of laggards – utilities and financials.

Only three utilities stocks of the 12 in the sector rose in value after reporting. Northland Power rose nearly 4 per cent. Algonquin Power & Utilities climbed 3 per cent, and Emera inched higher.

Only 37 per cent of financial stocks advanced. Among the stocks that did rise, there were several top performers, with three appearing on the top 10 list, those being Colliers International Group, Element Financial, and Canadian Apartment Properties REIT, which increased 10 per cent, 9 per cent and 8 per cent, respectively.

Listed in the accompanying table are the top 10 stock leaders and laggards from the previous quarter and their respective price moves immediately following their earnings announcements. While past performance is not indicative of future performance, this information can be useful. For instance, a company that misses expectations due to some operational challenges or competitive challenges can take a few quarters to get back on track, resulting in what is sometimes several quarters of disappointing earnings, and negative price reactions. Similarly, a company that is firing on all cylinders, with industry tailwinds, may realize positive price moves when reporting that lasts several quarters. What is also important to consider is the company's track record – to avoid one-hit rallies.

Notable Q3 price moves after earnings announcements

CompanyTickerPrice Reaction (% chg)
Badger DaylightBAD-T27
Concordia HealthcareCXR-T16
Mitel NetworksMNW-T15
Colliers Int'l GroupCIG-T10
Enghouse SystemsESL-T9
Element FinancialEFN-T9
Canadian Apartment Properties REITCAR.UN-T8
Aecon GroupARE-T-8
Magna InternationalMG-T-10
Just Energy GroupJE-T-10
Hudson's Bay Co.HBC-T-13
Sierra WirelessSW-T-23