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A roundup of some of the North American equities making moves in both directions today

On the rise

SNC-Lavalin Group Inc. (SNC-T) was up 11 per cent in early trading on Friday after it reported a fourth-quarter loss of $292.9-million as the company recorded a charge related to a $280-million fine it agreed to pay after its construction division pleaded guilty to fraud for actions taken in Libya between 2001 and 2011.

The engineering company has been working to set a new strategic direction for the company in recent months including the addition of several new senior executives and changes on its board of directors.

In reporting its results Friday before the bell, SNC says a special committee established in December 2018 to explore a range of alternatives has completed its work and been disbanded.

The company says the loss amounted to $1.67 per diluted share for the quarter compared with a loss of $1.6 billion or $9.11 per diluted share in the same quarter a year earlier when it recorded a $1.2-billion goodwill impairment charge.

In a research note, National Bank Capital analyst Maxim Sytchev called the results a "good showing" with the balance sheet "repaired" and "stronger" free cash flow generation.

He said the "solid" performance "gives line of sight for why it should be worthwhile to stick around."

“It’s likely too early to pronounce a win on this one but at least we are moving in the right direction with balance sheet at 2.1 times net debt to EBITDA leverage in a comfortable spot and critically much stronger than modeled OCF generation in the quarter," he said. "If the company can show positive FCF for a full year, this is where the re-rate really happens as investors are typically very skeptical of % of completion business models. All-in, good showing from Engineering services, losses in LSTK were quite small and will hopefully get even smaller as Resources verticals get right-sized (or sold… the company is still assessing its strategy there). Assuming that LSTK risk can be controlled, the big prize is engineering-type multiple post-fixed-price business exit. The shares are now trading at 5.5 times while pure consulting peers are being bestowed DOUBLE that multiple. But we have to grind through eight more quarters to get fully there; with infra projects seemingly under control, the upside looks enticing (even though the ride will have some bumps along the road).”

Houston-based Occidental Petroleum Corp. (OXY-N) increased 3 per cent in the wake of reporting a quarterly loss on Thursday after the bell, as the oil and gas producer took more than US$1.7 billion in impairment and other charges.

The company has been aggressively cutting costs by laying off staff and selling assets to pay down its US$38.54-billion debt pile following its US$38-billion acquisition of Anadarko Petroleum.

It has announced divestitures worth US$10.2-billion, compared with its target of US$15-billion.

Occidental had also previously lowered its spending plans for the year and trimmed production goals to safeguard its dividend at a time when investors have been pressuring oil and gas companies to boost shareholder returns.

On the decline

Algonquin Power and Utilities Corp. (AQN-T) dropped 2.7 per cent despite its fourth-quarter results, released after the bell on Thursday, modestly exceeded the Street’s expectations.

Raymond James analyst David Quezada said recent volatility in its stock provides an opportunity for investors to add to positions.

“We continue to highlight Algonquin as our top pick, and only buy-rated name among the regulated utilities we cover,” he said. “While the stock is up 14 per cent so far this year (vs. the TSX down 2 per cent and an impressive 53 per cent since the beginning of 2019 (vs. the TSX up 17 per cent) shares of AQN now trade at 22 times 2020 estimated P/E which remains a discount to the higher growth U.S. mid-cap utility peer group at 25-26 times. Key to our thesis, we continue to highlight AQN’s sector leading rate base growth (14-per-cent CAGR out to 2023E including recently announced M&A), EPS (9-11% CAGR) and dividend growth (+10% out to 2021E) as setting AQN apart from peers. These growth rates are driven by a $9.2-billion 5 year capital program which is also proportionally much larger than most NA utilities. We anticipate potential commentary or updates related to management’s stated plan to simplify the business as well as potential renewable asset recycling as potential upcoming catalysts.”

Pembina Pipeline Corp. (PPL-T) lost 2.8 per cent after reporting better-than-anticipated quarterly results after the bell on Thursday.

Industrial Alliance Securities analyst Elias Foscolos said: “Yesterday’s Q4/19 earnings announcement beat both estimates and consensus posting quarterly EBITDA of $787-million, which annualized ($3.1-billion) exceeded the high end of its guidance range. Even with the $300-million impairment charge on the Ruby Pipeline, the Pipelines and Facilities segment still preformed in line with expectations. For 2020, PPL maintains its $3.25-2.55-billion EBITDA guidance. Overall, while we saw a beat in estimates it would take a lot more to drive some price movement on the name. We therefore elect to take a neutral outlook on Pembina’s quarterly earnings.”

Laurentian Bank Financial Group (LB-T) plunged 8.4 per cent after it missed expectations as it reported its first-quarter profit fell to $32.2-million compared with $40.3-million in the same quarter a year earlier.

The bank says the profit amounted to 68 cents per diluted share for the quarter ended Jan. 31 compared with a profit of 88 cents per diluted share a year earlier.

On an adjusted basis, Laurentian says it earned 79 cents per share for the quarter, down from an adjusted profit of 98 cents per share in the first quarter of its 2019 financial year.

Analysts on average had expected an adjusted profit of $1.08 per share, according to financial markets data firm Refinitiv.

Laurentian chief executive Francois Desjardins says the bank was disappointed with its results and is addressing both the revenue and expense sides of the equation.

However, he notes Laurentian has seen continued growth in business services and progress towards stabilizing its loan portfolio to personal customers.

goeasy Ltd. (GSY-T) lost 3.5 per cent after it announced it will acquire a consumer loan portfolio from Mogo Inc. (MOGO-T), which has a gross receivables balance of approximately $31.9-million and approximately 5,700 active customers, consisting of personal installment loans with terms of up to 5 years.

The transaction also includes approximately $12.4-million of previously written off consumer loans and a commitment for Mogo to market and promote easyfinancial to its current and prospective members the company stated.

Shares of Mogo were down 5,6 per cent.

Innergex Renewable Energy Inc. (INE-T) slid 3.4 per cent in the wake of fourth-quarter results, released Thursday after market, that blew past expectations on the Street.

Raymond James’ David Quezada said: “With shares up 21 per cent year-to-date (vs. the TSX down 2 per cent), INE has delivered among the best performance within the IPP group . However, we continue to see upside via the company’s strong development portfolio and recent strategic alliance with Hydro Quebec. Accordingly, we maintain our constructive stance.”

“Our constructive view of Innergex is based on the company’s large development portfolio, attractive asset mix, and strong growth outlook. We also see the company’s recent strategic alliance with Hydro Quebec as accelerating the company’s growth outlook while potentially broadening the type of projects the company can pursue.”

Shares of Beyond Meat Inc. (BYND-Q) fell over 15 per cent on Friday after it narrowly failed to make a profit in the fourth quarter despite tripling sales, eating into expectations among investors for the high-flying faux meat maker.

Beyond Meat, which surged nearly ten-fold in value in the months after its stock market last May, has since partnered with numerous retail chains and restaurants, including McDonald’s, helping the company more than triple its revenue in 2019.

But with rival plant-based meat producers - from Impossible Foods, to Kellogg Co’s Morningstar Farms, or Nestle SA’s Sweet Earth - vying for shelf space at retailers and deals with food service outlets, analysts say the company is at risk of losing its first mover advantage.

Thursday’s quarterly report showed a 1 US cent per share loss for the quarter, versus analyst expectations of a 1 cent profit due to higher restructuring and some administrative costs.

From a peak of just under US$240 last July, shares in the company have now fallen back below US$100 and still look expensive on a traditional valuation basis, at 222.21 times expected earnings.

See also: Beyond Meat sales triple but shares drop as earnings miss expectations

Drugmaker Mylan NV (MYL-Q) slid 8.2 per cent after it said on Thursday it expects the coronavirus outbreak to impact its financial results and warned of drug shortages in case of continued spread of the virus.

“Our business exposure in China specifically is limited. However, given the global nature of our supply chain, operations and businesses, our results could potentially be impacted,” Chief Executive Officer Heather Bresch said on an earnings call.

Mylan said it was facing logistical issues, but had not seen problems with production or experienced price increases in active drug ingredients.

Although heavily reliant on China, the company said it was better positioned against the impact of the outbreak compared to its peers due to its diversified supply chain.

“The whole industry is in one way or other way connected with China, but you would expect us to be much better placed,” President Rajiv Malik said.

Boeing’s biggest supplier Spirit AeroSystems (SPR-N) was down 5.7 per cent after reporting a 61.8-per-cent fall in quarterly profit, as it took charges related to the 787 aircraft program, and said it would not provide a 2020 outlook until the 737 MAX jet is cleared to fly again.

Spirit’s net income fell to US$68-million, or 65 US cents per share, in the fourth quarter ended Dec. 31 from US$178-million, or US$1.68 per share, a year earlier.

With files from staff and wires

Follow David Leeder on Twitter: @daveleederOpens in a new window

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