Shopify Inc. seems to have put its short-seller blues behind it, reaching a 52-week high Wednesday, gaining more than 8 per cent in TSX trading. Thursday's release of fourth-quarter earnings may justify the enthusiasm, with analysts expecting strong numbers from the holiday season. What may be key to the shares' performance, though, will be the company's 2018 outlook.
The shares tanked last fall after short-seller Andrew Left of Citron Research questioned the company's methods of recruiting merchants. Since then, Shopify stock has made back its decline and more. Analysts expect a fourth-quarter sales gain in the neighbourhood of 60 per cent.
On Thursday's call with investors, says D.A. Davison analyst Tom Forte, "we will be listening for management's comments about its fast growing Shopify Plus platform, which now accounts for 20 per cent of monthly recurring revenue." He'll also focus on the impact of a new variable-rate pricing model the company implemented on some of its accounts early in 2017.
Forte notes Shopify's share performance Thursday might not be as volatile as it was last quarter, as it battled Mr. Left's charges, but it will still bounce more than in the past, he suspects, because of increased short interest and the likelihood of declining revenue-growth rates as the company gets bigger.
While Shopify may grab headlines south of the border, some of the most august names in corporate Canada released earnings Wednesday after markets closed; more are scheduled to report Thursday.
Sun Life Financial Inc. reported Wednesday, joined after hours by gold giants Barrick Gold Corp., Goldcorp Inc. and Kinross Gold Corp.
Sun Life beat analyst expectations, reporting earnings per share, excluding unusual items, of $1.05 versus analyst expectations of $1.02, per Thomson Reuters I/B/E/S data. Profits jumped at its U.S. businesses, but fell here at home. The company joined Manulife Financial Corp. in reporting a large one-time charge due to the U.S. Tax Cuts and Jobs Act, which makes the company's deferred tax assets less valuable because of the lower U.S. corporate income-tax rate.
Barrick reported a fourth-quarter net loss as it wrote down the value of a South African mine. Its adjusted net earnings per share, which removed the effects of these asset impairments, stayed flat in the fourth quarter, on a year-over-year basis, at 22 cents.
Investors were already expecting big things from Constellation Software – the shares hit a 52-week high Wednesday, having risen 35 per cent over the last year. The company's fourth-quarter numbers, released after the market closed, included some support for the good will, with the company beating analysts' estimates for sales. The acquisitive aggregator of disparate software companies reported $688-million in fourth-quarter revenue, versus analysts' consensus of $665-million, according to Thomson Reuters' Eikon.
Thursday sees Bombardier Inc., TransCanada Corp., Encana Corp. and Cenovus Energy Inc. reporting.
Bombardier's earnings report is the first since a U.S. trade commission handed an unexpected victory to Bombardier against Boeing, allowing the Canadian company to sell its newest jets to U.S. airlines without heavy duties.
TransCanada investors will be looking for news on whether the company's long-delayed Keystone XL pipeline will go ahead, and at what price. Meanwhile, Encana Corp. is expected to post a profit for the fourth quarter, helped largely by higher oil prices. The Alberta-based company has been focusing on its core assets to increase profit. Any updates on capital budget and production forecast will be of interest to investors.
Cenovus investors will be interested in the company's latest outlook about selling assets and cutting costs to reduce debt following its unpopular purchase of oil sands assets from ConocoPhillips last year.
With files from Reuters