A roundup of some of the North American equities making moves in both directions today
On the rise
Aecon Group Inc. (ARE-T) jumped 9.6 per cent on Friday after reporting better-than-anticipated second-quarter results after the bell on Thursday.
The Calgary-based construction company logged revenue and adjusted fully diluted earnings per share of $867-million and 31 cents, respectively, exceeding the consensus expectations on the Street of $770-million and 20 cents.
Desjardins Securities analyst Benoit Poirier said: “Most importantly, ARE reiterated its positive outlook for 2019, as its record backlog and robust pipeline of opportunities in addition to its ongoing concessions should lead to revenue and adjusted EBITDA growth (excluding the contract mining business); we expected revenue growth of 2 per cent (consensus of negative 1 per cent) and margin expansion of +100bps (consensus of +100bps). Interestingly, management also highlighted that the solid momentum should extend into 2020.
"Overall, we are pleased with the performance of both [the Construction and Concessions] segments, which contributed to solid results. From a trading perspective, we expect the stock to react positively [Friday] in light of these results, the reiterated 2019 outlook and robust backlog.”
TFI International Inc. (TFII-T) sat 3.5 per cent higher on the heels of Thursday evening’s release of better-than-anticipated second-quarter financial results.
Industrial Alliance Securities analyst Nav Malik said: “The Less-than-Truckload (LTL) and Truckload (TL) segments were the key drivers of growth. While TFII noted that North American economic growth has slowed and that volumes and spot rates in the transportation industry are under pressure, it continues to execute on initiatives to improve operational efficiency and maximize profitability.”
George Weston Ltd. (WN-T) increased 3.3 per cent after Friday morning’s release of better-than-anticipated quarterly results,.
The Toronto-based company reported adjusted earnings per share of $1.70, exceeding the expectation on the Street of $1.58.
“George Weston’s operating businesses continued to perform well in the second quarter," said chairman and CEO Galen Weston. "Loblaw delivered on its financial plan and is in a disciplined investment phase. Choice Properties delivered solid operating and financial results and further strengthened its balance sheet. And Weston Foods continues to stabilize with results on plan for the quarter.”
Shares of CannTrust Holdings Inc. (TRST-T) were up 16.7 per cent after it announced it has fired chief executive officer Peter Aceto “with cause” and forced the resignation of chairman Eric Paul amid a deepening scandal over cannabis plants being grown in unlicensed rooms.
The special committee of the board investigating the breaches at the Canadian cannabis grower said the high-profile departures stem from new information, but did not give details.
Twitter Inc. (TWTR-N) rose 9.2 per cent after it posted better-than-expected second-quarter revenue on Friday and an uptick in daily users who see advertisements on the site, driven by changes to show users more relevant content.
However, the company forecast third-quarter revenue below many Wall Street estimates and said revenue growth would lag the first two quarters, partly due to ending some older ad formats.
It forecast total revenue for the third quarter to be between US$815-million and US$875-million. Analysts on average were expecting about US$869.3-million.
McDonald’s Corp. (MCD-N) was up 0.5 per cent after it beat quarterly sales expectations at established U.S. restaurants on Friday, as the world’s largest burger chain benefited from remodelled stores and new deals, including the 2 for $5 Mix and Match offer.
Shares of Google’s parent company Alphabet Inc. (GOOGL-Q) increased 9.9 per cent in the wake of better-than-expected second-quarter revenue and earnings, easing worries about growth pressures on its advertising business.
Alphabet, which generates about 85 per cent of its revenue from sales of ad space and ad technology, reported total second-quarter revenue of US$38.9-billion. That was up 19 per cent over last year and compared with 17-per-cent growth in the first quarter. Analysts on average estimated 16.8-per-cent growth and US$38.2-billion in revenue.
Net income for the quarter increased to US$9.95-billion, or US$14.21 per share, topping the Street's expectation of US$8.02-billion, or US$11.32 per share.
Citi analyst Mark May said: “After posting disappointing revenue results in Q1, Alphabet rebounded and delivered better-than-expected revenue in Q2 ($38.9-billion in gross revs vs. $38.2-billion cons.), which also represented a sequential acceleration (gross Sites revenues up 20.5 per cent year-over-year FXN vs. 19.2 per cent in Q1). Growth was driven by mobile search and YouTube, and management provided a rare Google Cloud revenue update ($8-billion run-rate) that was slightly below our $9-10-billion estimate. As we had expected (based on our Jobs.com data and on management’s previous comments), expense growth also continued to slow – resulting in stable year-over-year operating margins following meaningful declines during 2018. The company repurchased $3.6-billion of shares (vs. $3.0-billion in the last quarter), and announced authorization of a new $25-billion repurchase plan (up from $12.5-billion). This quarter, we view management’s outlook commentary as more positive (“we’re positive about the (ML innovation) opportunity set”). We also note that an easing FX headwind will benefit GAAP growth in Q3. Taken together, the Q2 results were reassuring of the growth thesis and we still believe GOOGL can post a 3-yr forward top-line CAGR of 18 per cent and generate GAAP EPS of $53 in 2020.”
On the decline
Intel Corp. (INTC-Q) lost 1.1 per cent after it projected current-quarter profit and revenue above estimates and raised its full-year revenue forecast on Thursday.
RBC Dominion Securities analyst Mitch Steves said: “Intel reported results ahead of expectations and surprisingly raised full year guidance by $500-million/$0.05 as the Company now believes that the PC TAM will be up year-over-year in 2019 and cloud/ communications demand should improve in 2H19. In addition, the Company officially sold the majority of its smartphone business which should act as a material EPS tailwind for the Company (likely losing $1-billion a year). Notably, the Company believes that $400-million of the Q2 upside was due to pull-in from the US/China trade war as companies purchased ahead to acquire necessary semiconductor components. Net Net: at this time we see no change to the thesis but note that divestitures are a way for the Company to improve the bottom line as it attempts to move to 10/7nm and beyond (working to close the gap with TSMC). Looking forward we are focused on AMD and NVDA earnings as it will help the investment community size the market share shifts in the space (i.e. was the PC upside all demand?).”
Canfor Corp. (CFP-T) was down 5.8 per cent following the release of mixed second-quarter results.
Revenue of $1.3-million fell just short of the Street’s $1.4-million expectation, while an adjusted loss of 10 cents per share blew past the consensus projection of a 38-cent loss.
In a research note, Raymond James analyst Daryl Swetlishoff said: “Canfor’s Outperform rating is a function of our constructive view of mid-term lumber markets coupled with a valuation disconnect with peer lumber producers. We expect this is related to Canfor’s higher relative exposure to the high-cost BC region along with a lack of investor understanding of the Vida/Sweden acquisition. We are constructive on Canfor’s recent steps to diversify its asset base (capacity curtailments in BC, and expansion into stable margin regions i.e., Europe). With shares trading down to multi-year lows we highlight that the market is now valuing Canfor at just 70 per cent of replacement value. While it will take time for BC delivered log costs to adjust, we highlight that nearly 2.0 billion board feet of capacity has now been permanently closed. As a result, in addition to eventual BC stumpage relief we expect tighter lumber markets as BC shipments are gradually reduced which should translate to higher share prices.”
Amazon.com Inc. (AMZN-Q) slumped 1.6 per cent following Thursday’s release of its first profit miss in two years and in the wake of saying its income would slump in the current quarter as it raises spending on one-day delivery in an attempt to boost sales growth.
The retail giant reveal one-day shipping was paying off, leading to a rise in revenue of 20 per cent to US$63.4-billion in the second quarter ended in June. That topped analysts’ estimates (US$62.5-billion) and the 17-per-cent rate of growth that Amazon posted in April.
Overall, earnings per share of US$5.22 fell short of the consensus projection on the Street of US$5.57.
RBC Dominion Securities analyst Mark Mahaney said: "All in, Q2 results were generally mixed, with North American revenue above Street, International and AWS [Amazon Web Services] revenue a tad below Street, and Operating Margins contracting 78 basis points year-over-year.
With files from Jeffrey Jones, Mark Rendell, Brenda Bouw and wires
David Leeder