A roundup of some of the North American equities making moves in both directions today
On the rise
Lionbridge AI is a provider of crowd-based training data and annotation platform solutions, which are used to develop artificial intelligence models. The deal is expected to close Dec. 31, 2020.
On Friday, Telus reported $321-million of net income during its third quarter, even as it grew its revenue, hiked its dividend and added new wireless and internet subscribers.
The earnings amounted to 24 cents per share, down from 36 cents per share during the same quarter last year.
The company attributed the decline to multiple impacts stemming from the COVID-19 pandemic, as well as increased depreciation and amortization.
- Alexandra Posadzki
Auto parts maker Magna International Inc. (MG-T) rose after it posted better-than-expected earnings on Friday, returning to profit in the third quarter as its key customers ramped up production to meet recovering demand for new cars in Europe, China and the United States.
The Ontario-based company also raised its 2020 sales outlook to US$31.5-billion-US$32.5-billion from US$30-billion-US$32 billion. Analysts were expecting US$31.4-billion, according to IBES data from Refinitiv.
Auto sales in North America have gradually recovered since lockdown measures were eased, prompting major automakers to ramp up production and rebuild inventories for high-margin sport utility vehicles and pickup trucks.
That has lifted sales at several auto suppliers including Magna, which makes parts such as body structures, chassis and powertrain for customers including Ford Motor and Volkswagen.
Magna also raised its 2020 North American light vehicle production outlook to 12.7 million units from 12.5 million. In Europe, it now expects full-year production to be about 16.1 million units, compared with 15.9 million before.
Magna reported a net income of US$405-million, or US$1.35 per share, for the third quarter ended Sept. 30, compared with a loss of US$233-million, or 75 US cents per share, a year earlier.
On an adjusted basis, it earned US $1.95 per share, while analysts were expecting US$1.33 per share.
“This provides MogoSpend users with even more options for cashless, contactless payment using their smartphone or other devices, while continuing to get all the benefits and security of MogoSpend,” the company said.
The Waterloo, Ont.-based company reported revenue in the quarter ended Sept. 30 of US$804-million, up 15.4 per cent from a year earlier and close to $50-million above average analyst expectations.
Open Text, which sells data-management software to large enterprises such as General Motors Co., Citigroup Inc. and the Canadian government, earned $103.4-million (38 cents per share), up 39 per cent from its first quarter last year. Analysts focus on Open Text’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA), which came in at $342.3-million – far surpassing their expectations in the $277-million range.
- Sean Silcoff
Trican Well Service Ltd. (TCW-T) rose on the heels of the release of better-than-anticipated quarterly results before the bell.
ATB Capital Markets analyst Waqar Syed said: “We view TCW’s results very favorably, and expect an upward revision to consensus 2020 and 2021 estimates, leading to a positive stock reaction. We continue to believe that TCW will be a long-term winner in the Canadian pumping market, and the Canadian market is getting more concentrated, which is improving the structure of Canadian pressure pumping. Being the largest pumper in Canada, TCW is well positioned to benefit. We also have a positive view on TCW’s share buyback program: It has repurchased and cancelled 16.1 million shares (about 6 per cent of year-end 2019 shares outstanding) so far in 2020.”
CanWel Building Materials Group Ltd. (CWX-T) was higher after reporting higher third-quarter revenue and earnings on strong demand and prices for its construction material products thanks to surging home improvement activities.
The Vancouver-based company says it earned $31-million in the three months ended Sept. 30, up from $6.4-million in the year-earlier period, as revenue increased 26 per cent to $472-million from $373-million.
Analysts had expected earnings of $17.7-million on revenue of $461-million, according to financial data firm Refiinitiv.
CanWel says sales in its distribution segment increased by $102-million or 28 per cent despite the economic impact of the COVID-19 pandemic, demonstrating a steady overall end-market demand for its products.
Its construction materials segment accounted for 65 per cent of sales, compared to 57 per cent in the third quarter last year.
Haywood Securities analyst Colin Healey said: “A robust construction materials market will provide tailwinds into Q4 and record Q3 results should translate into share CWX performance. We Like CWX at current levels with its 7-per-cent yield at reduced distribution levels and strengthening underlying fundamentals. Given the strong Q3 numbers, we could see a reversion back to the $0.14 quarterly distribution (up from $0.12) at some point as an added catalyst.”
Uber Technologies Inc. (UBER-N) was higher after it said on Thursday demand for its food-delivery service exploded in the latest quarter, but recovery in its global rides business is being held back by its most important market, the United States.
Uber’s recovery will depend much on the course of the pandemic, with a resurgence in virus infections threatening to keep customers wary about returning outside or planning frequent trips far into 2021.
Ride bookings were dragged down by a slow recovery particularly on the U.S. West Coast, while Europe and the Middle East recovered more steadily, down only 36 per cent from last year.
Ride-hailing customers who have returned are proving to be price-sensitive, pressuring margins in what was once Uber’s largest and most important segment.
The company now heavily relies on cost reductions and growth at its food-delivery business, Eats, which is gradually reducing losses but remains a drag to Uber’s bottom line.
Quarterly revenue and adjusted loss missed Wall Street expectations, but the company nevertheless affirmed its goal to be profitable on an adjusted basis before the end of 2021.
Uber reported an adjusted third-quarter EBITDA loss of US$625-million was wider than analyst expectations of a US$597-million loss, according to IBES data from Refinitiv.
On the decline
Enbridge Inc. (ENB-T) declined as it reported a 14.5-per-cent fall in quarterly adjusted profit on Friday, as it moved lower volumes of crude on its mainline system due to a coronavirus-led slump in demand.
A sharp decline in global crude prices and demand destruction cause by the pandemic has battered Canada, the world’s fourth-largest crude producer, which was already facing steep discounts for its oil.
Fuel demand however has picked up with the easing of restrictions, but a resurgence in COVID-19 infections could lead to renewed lockdowns and derail demand recovery.
“While we are encouraged by the economic activity and recovery in energy demand, we are assuming a gradual pace of recovery over the balance of 2020 and into 2021,” Chief Executive Officer Al Monaco said in a statement.
The Calgary-based company transported 2.6 million barrels per day (bpd) of crude oil on its Mainline system across Canada and the United States during the quarter, down from 2.7 million bpd in the year-ago quarter.
Excluding items, the company earned 48 cents per share, compared with 56 cents per share last year.
Exercise bike maker Peloton Interactive Inc. (PTON-Q) warned late Thursday of near-term supply constraints, as demand for its at-home fitness equipment has shot up due to gym closures during the pandemic.
Peloton shares, which have risen four-fold this year, were lower, as the company’s first-quarter results topped Wall Street estimates and it raised the annual revenue forecast.
The exercise bike maker’s Connected Fitness revenue jumped 274 per cent to US$601.4-million in the quarter while its subscriptions climbed 137 per cent to US$1.33-million.
The segment, Peloton’s primary revenue generator, includes interactive fitness equipment with touchscreen that streams live and on-demand classes.
The company raised its 2021 revenue forecast and said revenue would be at least US$3.9-billion, compared with its previous forecast range of US$3.50-billion to US$3.65-billion.
Peloton’s total quarterly revenue surged more than three-fold to US$757.9-million. Net profit attributable to Class A and Class B shareholders was US$69.3-million, or 20 US cents per share.
Analysts on average had estimated the company to report a profit of 11 US cents per share on a revenue of US$734.2-million for the quarter.
Pembina Pipeline Corp. (PPL-T) was down after saying its net income decreased 14 per cent to $318-million in the third quarter.
The Calgary-based company says it earned 51 cents per diluted share for the three months ended Sept. 30, compared with 66 cents per share or $370-million a year earlier.
Revenues were $1.57-billion, down from $1.7-billion while net revenues increased to $849-million from $751-million in the third quarter of 2019.
Pembina was expected to earn 52 cents per share on $1.72-billion of revenues, according to data firm Refinitiv.
Raymond James analyst Chris Cox said: “This was a relatively uneventful quarter, with consolidated and segmented results all nearly matching our estimates into the print. We believe the key focus coming out of the quarter will be the early-December business update, which will include a 2021 outlook, capital budget, funding plan and an update on all the previously deferred capital projects. With physical volumes still languishing across much of the Conventional Pipelines segment, we don’t expect a wave of new capital projects. However, we do believe there are areas where additional expansion is needed - the NEBC region strikes us as one area where additional infrastructure would be well utilized - and we believe a re-scoping of the legacy Peace expansions could drive a more modest growth profile, but with improved return on capital metrics.”
Intact Financial Corp. (IFC-T) was flat after the Globe and Mail reported is in talks to jointly acquire British insurer RSA Insurance Group PLC for the equivalent of $12.4-billion in cash, marking a major international bet for the Canadian automobile and property insurer after a decade-long run of dominance in its home market.
The joint proposal, announced Thursday, would see Intact team up with Denmark’s Tryg A/S to pay £6.85 ($11.76) a share for RSA, a 48-per-cent premium to where the stock opened for trading on Thursday in London. RSA said the proposal was first made in early October and that a formal offer has not yet been submitted, but added that its board is “minded to recommend” the proposal.
If completed, the deal would see Intact take ownership of RSA’s Canadian, British and international operations, as well as co-own RSA’s business in Denmark. Tryg would take full ownership of RSA’s operations in Sweden and Norway. RSA’s Scandinavian business is its most valuable, contributing 52 per cent of operating profit in the first half of 2020.
- Tim Kiladze
With files from staff and wires