A roundup of some of the North American equities making moves in both directions today
On the rise
A day after its stock jumped almost 9 per cent on a report in The Globe and Mail that the company had been approached about a potential takeover offer, Inter Pipeline Ltd. (IPL-T) was up a further 5 per cent on Friday.
The company said it had received a takeover proposal from a third party, but stressed it is not in talks to sell.
Inter’s announcement, made at the request of the Toronto Stock Exchange, confirms a Globe report that an unnamed suitor has approached the board with a cash offer.
“While it is the company’s policy not to comment on market speculation or rumours, Inter Pipeline confirms that it received an unsolicited, non-binding, conditional and indicative proposal to purchase the company but it is not in negotiations with any third party, nor is there any agreement, understanding or arrangement with respect to any such transaction,” the company said in a statement.
- Jeffrey Jones
Desjardins Securities analyst Benoit Poirier said: “Overall, we expect a positive reaction to the results in light of the solid beat across the board (revenue, EBITDA, adjusted EPS), record backlog and increased guidance for FY20 and FY22.”
Sleep Country Canada Holdings Inc. (ZZZ-T) increased 12.3 per cent after it reported second-quarter results on Thursday after the bell that beat expectations. The company said its revenue increased by 15.9 per cent to $166.6-million from $143.7-million a year earlier. Same-store sales increased by 1.9 per cent, the company stated.
Net income was $12.2-million or 33 cents per share, which was consistent with the year-ago period. Analysts were expecting revenue of $161-million and earnings of 31 cents.
AltaCorp Capital analyst Patrick O’Rourke said: “Overall, we view the event as neutral to slightly positive, with the Company continuing its track record of meeting operating and financial expectations, with both a modest production and cash flow beat, and a slight increase to full year guidance. The balance sheet remains amongst the strongest in the group and, despite growing liquids volumes, the Company continues to project full year FCF that will be applied to the NCIB."
AltaCorp Capital's Tim Monachello said: "CEU’s strong Q2 beat vs. our estimates was due to stronger activity in drilling fluids in both Canada and the U.S. as well as above expectation activity in its U.S. Specialty Chemicals business. Overall, CES generated 10 per cent stronger than forecasted Canadian revenue and 8 per cent stronger than forecast US revenue."
“CES’s adjusted EBITDAS (adjusting for $1.5-million in IFRS 16 impacts year-over-year) was up 7 per cent year-over-year, and the result marked CES’s highest Adj. EBITDAS level recorded in a second quarter in its history, and marked the 3rd consecutive quarter of percentage margin improvements despite weaker seasonal activity in Canada. CEU generated $313-million revenue, also ahead of the $297-million consensus estimate and our $287-million forecast. We calculate CES generated $14-million in distributable free cash flow, roughly in-line with our $13-million estimate. We view this result as highly encouraging and a continued validation of CES’s emphasis on margin expansion, free cash generation, and returning operating leverage to the business.”
Beyond Meat Inc. (BYND-Q) rose 1 per cent after shelving plans to enter Japan, according to a Japan-based investor, focusing more on the U.S. market where it recently bolstered funding to fuel an expansion and beat out emerging faux-meat rivals.
Japanese trading house Mitsui & Co Ltd, which bought a small stake in Beyond Meat in 2016, said it previously planned to partner with the U.S. company to sell plant-based meat alternatives in Japan, but there was no longer such a project.
CannTrust Holdings Inc. (TRST-T) reversed course late and closed up 40.8 per cent after it said on Friday auditor KPMG LLP has withdrawn its report on the company’s financial statements for full-year 2018 and its interim report for the three month period ended March 31.
On the decline
Restaurant Brands International Inc. (QSR-T) was down 3 per cent after announcing the public offering of its shares commenced by HL1 17 LP, an affiliate of 3G Capital Partners Ltd., has increased in size.
According to Bloomberg, the offering price is set US$73.50-US$75.50 per share, representing a discount to Thursday’s close.
Recipe Unlimited Corp. (RECP-T) was down 2.8 per cent after its second-quarter results fell short of the Street’s expectations.
Same-store sales growth declined for the second consecutive quarter, falling 1.7 per cent.
Laurentian Bank Securities analyst Elizabeth Johnston said: “SSSG remained at the same level sequentially, with variable brand performance and challenging weather conditions once again highlighted as headwinds in the period. Looking at the other Canadian restaurants that have reported their Q2/19 already, SSSG has remained muted with some brands reporting slightly better organic growth (vs Q1), and most just slightly positive. Given that lack of sequential improvement from RECP this period, we will be looking for any additional commentary with respect to differences in regional or restaurant type performance (i.e. QSR vs FSR).”
Shares of Hydro One Ltd. (H-T) were down 0.1 per cent after its second-quarter profit fell by nearly 23 per cent from last year to $155-million as the electricity utility experienced higher weather-related costs for vegetation control and storm-related power restoration.
Calling the results weaker-than-expected, Industrial Alliance Securities analyst Jeremy Rosenfield said: “We continue to view Hydro One as a fundamentally defensive investment, underpinned by (1) stable earnings and cash flows from its regulated utility businesses located in Ontario, (2) healthy organic rate base and earnings growth (4-6%/year through 2023), and (3) an attractive dividend (~4% yield, 70-80% target payout). We continue to see the stock as fairly valued and range bound over the near term during the ongoing leadership transition."
Hudbay Minerals Inc. (HBM-T) lost 4.3 per cent after reported second-quarter revenue of US$329.4-million, down from US$371.3-million a year earlier and ahead of expectations of US$310.6-million. Its loss came in at US$54.1-million or 21 cents US per share versus a profit of US$24.7-million or 9 cents US a year earlier. Analysts were expecting a profit of a penny per share.
Industrial Alliance Securities analyst George Topping said: “The stock is too cheap relative to its $11.60/share NAV [net asset value].”
Shares of CCL Industries Inc. (CCL-B-T) fell 8.9 per cent after its quarterly results fell short of expectations on the Street.
BMO Nesbitt Burns analyst Stephen MacLeod said: "The shortfall was largely in the CCL segment, where June was soft and the aerosol business was unusually slow in North America. July trends have improved, and the Q3 outlook is for improvements across all business segments.
“Notwithstanding Q2 weakness, we continue to view CCL as a best-in-class packaging company deserving of a premium valuation, and we maintain our Outperform rating.”
Shares of Uber Inc. (UBER-N) fell 7 per cent on Friday after the ride-hailing service missed most Wall Street targets in its quarterly earnings report, in sharp contrast to upbeat numbers from U.S. rival Lyft Inc. (LYFT-Q) a day earlier.
Lyft shares were down 4.9 per cent.
With files from Brenda Bouw, staff and wires