Toronto-Dominion Bank wraps up a robust earnings season for the Canadian banks Thursday, but the sector that might see the most action is energy, what with a host of exploration and production companies reporting Wednesday night and Thursday morning.
The earnings releases come against the backdrop where Alberta producers were forced to sell crude at a deep discount due to pipeline and railway constraints during the fourth quarter. At the same time, Wednesday's drop in the markets and oil prices – WTI and Brent fell 2.24 and 2.74 per cent, respectively – cast a pall over the sector.
The biggest is Canadian Natural Resources Ltd., which releases fourth-quarter results Thursday. Current storm clouds notwithstanding, analysts have been growing more enthusiastic on CNQ, with 11 company watchers boosting their fourth-quarter earnings estimates since December, according to Thomson Reuters Eikon. The company's November investor day made the case the company had transitioned to a portfolio of long-life assets that make it, in the words of AltaCorp Capital analyst Nick Lupick, "a well-oiled free-cash-flow machine."
The average CNQ estimate is for 36 cents in earnings per share, but several of the estimates recently ticked up above 40 cents. Canadian Natural has beaten the average estimate six times in the past eight quarters, according to Eikon.
Husky Energy Inc. is expected to post EPS of 20 cents, according to Eikon. Husky, like other oil sands companies, has invested in new projects and acquisitions and cut costs amid competition. The company forecast flat 2018 production growth despite setting a higher capital budget. Investors will look out for details on Husky's plans for the year.
Crescent Point Energy Corp is also expected to post a fourth-quarter profit from a year-ago loss, helped by growth in production and higher realized prices for oil. Vermilion Energy Inc., Calfrac Well Services Ltd., and TORC Oil & Gas Ltd. all also report before the market opens Thursday, while Peyto Exploration & Development Corp. and Pengrowth Energy Corp. were scheduled to release results Wednesday after markets closed.
Back to the banks: It's up to Toronto-Dominion Bank to keep the sector's winning streak alive. Wednesday, National Bank of Canada's $1.48 quarterly earnings beat the average estimate by six pennies, according to Bloomberg. The market downdraft Wednesday, however, has beaten back some of the small gains made by the sector since CIBC rang the bell last week.
On average, analysts expect first-quarter EPS of $1.46 from TD, with 11 analysts boosting their estimates upward so far this year. Two have ticked them down in the last two weeks, however.
Kinaxis Inc., one of Canada's leading tech companies, reported earnings late Wednesday. Its EPS of 21 cents missed the Street view of 23 cents.
Thursday also starts reports from a cluster of Canadian utilities. AltaGas Ltd. releases earnings before the market opens, while Atlantic Power Corp., Algonquin Power & Utilities Corp. and TransAlta Corp. are scheduled to disclose results after trading ends.
In the U.S., a handful of major retail names are on tap.
Department store operator Kohl's Corp. is expected to report a higher fourth-quarter profit, boosted by strong holiday same-store sales growth that far outpaced bigger peers. Nordstrom Inc. is expected to report a rise in same-store sales after a strong holiday season. Record-breaking online shopping during the fourth quarter will have been a boon to Nordstrom, which has one of the strongest digital businesses in the industry. Apparel retailer Gap Inc. is again expected to bank on Old Navy sales to boost quarterly revenue, but Wall Street is more interested in holiday sales from its Gap brand, after the company abruptly fired its president on Feb. 20, saying the progress of its turnaround was disappointing.
With files from Reuters