Is everything aligned for The Stars Group Inc. as it releases results Wednesday morning? Any numbers short of stellar may mean the company may be … well, a falling star.
The online poker company's shares are up 29 per cent already this year, making it the second-best performer in the S&P/TSX Composite (behind Shopify Inc. and its 44 per cent return, since you asked). The shares hit a 52-week high in Tuesday's trading, and the company is pushing $6-billion in market capitalization.
Despite that, the stock is not widely covered on Bay Street, with none of the big-bank research houses providing coverage. Just six analysts have a rating on the name, with four buys, a hold and a sell, according to Thomson Reuters Eikon.
That makes the mean estimates for the quarter – $355-million in revenue, and 57 cents in earnings per share, per the company's preferred measure – arguably less robust than averages derived from the work of a dozen or more hands. (Numbers courtesy Eikon.)
Regardless, recent history suggests a shooting star rather than a falling one. Stars Group has consistently topped the estimate, according to Eikon, with positive surprises over the last eight quarters ranging from a 5 per cent beat to more than 30 per cent in 2016's second quarter. In its most recent report, for the period ended in September, Stars Group beat the estimate by more than 20 per cent.
With investors bidding up the shares in anticipation of Wednesday's report, anything short of another beat may disappoint.
Investors looking for a company with something to prove might instead cast an eye to Seven Generations Energy Inc. Like a lot of other exploration and production companies, it's had a rough year, but not the roughest: Its year-to-date decline of just over 20 per cent is topped by a half-dozen other E&P stocks.
Analysts are overwhelmingly positive on the shares – value, you know – with 17 of 19 recommending a buy. They expect, on average, just under $590-million in fourth-quarter revenue and 29 cents per share in earnings. The company has significantly beaten expectations in each of 2017's first three quarters. A fourth surprise might do a little bit to reverse its fortunes, even with the sector's malaise.
Wednesday morning's earnings list has some even bigger fish, even if there may be less drama at hand.
Empire Co. Ltd., parent of Sobeys Inc., is set for an early release, with an investor call before the markets open. Analysts expect, on average, just under $6-billion in revenue for the quarter and 25 cents in EPS. While that profit estimate has been ticking up in the last month, according to Eikon, Empire's larger competitor Loblaw Cos. Ltd. helped temper expectations for the grocery sector last month when it reported a sales decline. Loblaw Chief Financial Officer Darren Myers said his company would face "significant headwinds" due to higher Ontario labour costs and unfavorable health reforms.
Quebecor Inc. is also slated for a morning release. Analysts expect the telecommunications company to report just under $1.08-billion in revenue and 37 cents of EPS for the quarter. Analysts have been tweaking the profit estimate downward in the last month, and Quebecor has been literally hit-or-miss – alternating between the two – for the last six quarters. A miss Wednesday would be the second in a row, however.
Wood-products company Stella-Jones Inc., a lesser-known Quebec corporate citizen, is the fifth Composite company with an earnings release on the Wednesday calendar. Analysts expect, on average, $370-million in revenue and 37 cents EPS. The company has a four-quarter streak of earnings beats heading into its fourth-quarter report.