A humorous look at the companies that caught our eye, for better or worse, this week
General Electric (DOG)
As if General Electric needed any more problems, now it’s being called a giant accounting fraud. Harry Markopolos, the forensic accounting analyst who blew the whistle on Bernie Madoff’s Ponzi scheme, accused GE of hiding US$38.1-billion of losses – US$29-billion in its long-term care insurance business and US$9.1-billion in its Baker Hughes oil and gas unit – and said the company will prove to be a “bigger fraud than Enron.” GE called the accusations “meritless,” but the stock’s biggest one-day loss in 11 years indicates some investors believe Mr. Markopolos may be onto something.
Business quiz! Shares of U.S. department store Macy’s plunged after the iconic retailer: a) cancelled its annual Macy’s Thanksgiving Day Parade, saying it plans to stream previous year’s parades online to save money; b) announced that it will turn its flagship Manhattan location into the world’s largest dollar store; c) reported second-quarter earnings well below expectations and reduced its full-year guidance after a ”fashion miss" in women’s apparel, poor sales of warm-weather clothing and a decline in international tourism led to heavy discounting. Answer: c.
Canopy Growth (DOG)
What do smoking marijuana and investing in marijuana stocks have in common? Both can trigger severe anxiety. Canopy Growth investors were overcome with fear and dread after the cannabis producer reported a $1.28-billion loss – mostly attributable to the extinguishment of warrants held by major investor Constellation Brands Inc. – as net sales fell 4 per cent from the previous quarter and were lower than analysts had expected. With Canopy’s stock tumbling by about 47 per cent from its 2019 high after back-to-back quarters of disappointing results, investors want a new drug. Valium, perhaps.
Just Energy Group (DOG)
Just Energy investors just got a nasty surprise – again. The electricity and natural gas retailer, which reduced its dividend in both 2013 and 2014, suspended its payout altogether this week as it announced worse-than-expected quarterly results, took a $133-million writedown on customer receivables and cut its fiscal 2020 guidance. A strategic review of the business is continuing and could result in a sale of the company, but with the stock getting crushed on all the bad news, Just Energy investors just want out.
“Gimme a W! Gimme an A! …” Employees at Walmart’s morning meetings were cheering with extra exuberance after the retailer reported better-than-expected revenue and earnings for the second quarter, driven by a 2.8-per-cent increase in U.S. same-store sales and a 37-per-cent surge in U.S. e-commerce orders. As Walmart rolls out next-day merchandise delivery – now available to about three-quarters of the U.S. population – and expands its online grocery business, investors are cheering, too.