A roundup of some of the North American equities making moves in both directions today
On the rise
Asset manager Onex Corp. (ONEX-T) continued to come back strong from pandemic-related setbacks, posting a US$515-million profit in the most recent quarter after losing US$1.1-billion in the first quarter of the year.
Toronto-based Onex’s shares rose after it announced on Friday that the value of its private equity investments increased by 14 per cent in the last three months and are up nine per cent, year to date. The company’s US$38-billion of assets under management includes a US$265-million investment in WestJet Airlines Ltd.
“Building on our portfolio improvements last quarter, we continue to demonstrate increased momentum in our private equity and credit portfolios, resulting in a very good quarter for Onex,” said Gerry Schwartz, Onex’s founder and chief executive.
After the pandemic hit North America in March, Onex spent several months working with the companies it owns and building the team that runs its credit market portfolios to ensure they could weather an economic downturn. In recent months, Mr. Schwartz and his team put capital to work.
Onex made three significant investments in the most recent quarter, including a US$725-million commitment by the company and its funds to Atlanta-based OneDigital, a leading U.S. provider of employee benefits, insurance and retirement services. Onex also spent US$444-million over the first 10 months of this year buying back 9.8 million of its own shares.
- Andrew Willis
Montreal-based Dorel Industries Inc. (DII.B-T) was narrowly higher after announcing it will exit the public market as part of a go-private deal led by Cerberus Capital Management LP and the family that has had voting control of the company for decades.
The Montreal-based bike, car seat and furniture maker says a group, led by a Cerberus affiliate, will buy Dorel for $14.50 per share in cash, except for shares owned by a group of family shareholders that includes Dorel’s chief executive officer.
Dorel says TD Securities valued its shares in the range of $14 to $17 per share on Nov. 12, and that $14.50 was the highest offer for the company.
The deal ends an 11-month saga for Dorel, which makes Cosco and Safety 1st child car seats, Cannondale and Schwinn bicycles.
Chief executive Martin Schwartz says the deal is a win for all stakeholders, including those with publicly traded shares, after more than 25 potential financial sponsors and partners were vetted.
Dorel recently reported third-quarter revenue growth of 9.9 per cent compared to the same time last year, as it struggled to keep up with demand for bicycles and home furniture amid shifting consumer spending patterns related to the COVID-19 pandemic.
CCL Industries Inc. (CCL.B-T) jumping after posting upbeat third-quarter earnings.
Before the bell, the packaging products maker reported earnings per share of 93 cents, up 29.2 per cent year-over-year and above the Street’s expectation of 68 cent.
Intertape Polymer Group Inc. (ITP-T) saw gains as a series of equity analysts raised their target prices for its stock before the bell in response to its third-quarter results.
BMO’s Stephen MacLeod said: “We continue to like ITP’s e-commerce exposure, which positions the company well to benefit from a structural shift in consumer buying patterns. We have increased our estimates and target, and see a path to even further multiple expansion,”
Longueuil, Que.-based Héroux-Devtek Inc. (HRX-T) rose with the release of better-than-anticipated second-quarter financial results before the bell.
The aerospace products and landing gear manufacturer reported sales of $137.1-million, down from $145.5-million a year ago but above the Street’s forecast of $128.6-million. Earnings per share of 11 cents also topped expectations (by 2 cents).
The company also said its restructuring initiatives, which were announced in May, are proceeding as planned with 70 per cent of expected workforce reductions completed. It said it also decided in October to close its Wichita facility as a result of decreasing business volume.
In a research note, Desjardins Securities' Benoit Poirier said: “We are pleased with the 2Q results, which demonstrate management’s ability to deliver solid adjusted EBITDA margin and FCF despite the challenges experienced by the Commercial division in light of the pandemic. Prior to the results, HRX traded at an FCF yield (FY1) of 12.8 per cent, the highest among its U.S. peers. We recommend investors buy the shares this morning.”
Walt Disney Co. (DIS-N) jumped as its rapidly growing streaming video business and a partial recovery at its theme parks gave investors fresh hope on Thursday that the entertainment company had made it through the worst of the coronavirus pandemic.
Overall revenue fell 23 per cent to US$14.71-billion in the quarter, above analysts' average estimate of about US$14.2-billion.
Disney’s adjusted loss per share, excluding one-time items, of 20 US cents, also beat Wall Street expectations of a more drastic 70 US cents per share loss.
While the coronavirus pandemic clobbered the company’s theme parks and movie studio, the focus on streaming was well timed to consumers stuck at home, and Disney managed its sparsely attended theme parks with smaller losses than analysts expected.
One year after it launched the Disney+ online subscription to compete with Netflix Inc, Disney said the service had signed up 73.7 million subscribers. Hulu had 36.6 million customers and ESPN+ had 10.3 million.
“We are going to continue to ramp up our investment” in streaming, Chief Executive Bob Chapek said on a conference call.
For the just-ended quarter, the streaming division lost US $580-million, less than the US $1.0-billion that analysts expected. Anwar predicted it would turn a profit ahead of 2024, when the company forecast.
Disney said it will forgo its semi-annual dividend for the second half of fiscal 2020 to finance its streaming business.
Cisco Systems Inc. (CSCO-Q) rose after it reported a smaller-than-expected drop in first-quarter revenue as more people working from home during the COVID-19 pandemic drove demand for its teleconferencing tools, networking equipment and cybersecurity products.
After the coronavirus-driven lockdowns started earlier this year, demand for the company’s videoconferencing platform Webex, virtual private network AnyConnect and cybersecurity products surged as offices remained shut with more people working remotely.
The company’s revenue fell 9 per cent to US$11.93-billion in the quarter ended Oct. 24.
The fall was slowed by the strength in its services segment, helping it beat analysts' estimates of US$11.85-billion, according to IBES data from Refinitiv.
Excluding items, Cisco earned 76 US cents per share while analysts expected profit of 70 US cents per share.
Cineplex Inc. (CGX-T) increased despite reporting an 85-per-cent decline in revenues, and a $121.2-million net loss in its third quarter, as restrictions on public gatherings continued to have a significant impact on the movie theatre industry.
The Toronto-based company reported on Friday that 1.6-million visitors came to its theatres in the three months ended Sept. 30, compared to an audience of 17.5-million in the same period last year.
After closing all of its 164 movie theatres across Canada on March 16 to help curb the spread of the novel coronavirus, Cineplex began reopening some venues in late June. By Aug. 21, all of its locations had reopened. Canadian movie theatres were among the first to screen the highly-anticipated Christopher Nolan thriller Tenet.
- Susan Krashinsky Robertson
See also: Cinemas vs. streaming: The war for your attention
On the decline
Altus Group Ltd. (AIF-T) slid in Friday trading after its third-quarter results fell short of expectations.
In a research note, Scotia Capital analyst Paul Steep said: "Our view is that Altus' Q3 results reflected a mixed quarter with revenues in line and adj. EBITDA and EPS above our estimates driven by strength in Property Tax. We believe that the firm continues to navigate a challenging time for all its clients with lower-than-expected results in Altus Analytics (AA) as the pandemic slowed the migration of clients towards the Cloud, along with lower one-time revenues (OTR).
“We maintain our Sector Perform on the stock as the firm manages through a challenging period for its Commercial Real Estate customers dealing with the impact of the pandemic. We expect quarterly results through 2020 could be more volatile than usual given the impact of the pandemic on Altus' businesses. Longer-term, we see the Altus Analytics transition to being cloud first as positive, with potential for the firm to expand on its data analytics capabilities to leverage its operations outside North America.”
See also: Friday’s analyst upgrades and downgrades
Enbridge Inc. (ENB-T) reversed course and fell in afternoon trading after Minnesota regulators on Thursday approved key permits for its Line 3 crude pipeline replacement project, paving the way for the project to receive federal permits from the U.S. Army Corps of Engineers after facing years of delays.
The Minnesota Pollution Control Agency (MPCA) announced approvals for the Line 3 project, including the contested 401 Water Quality Certification, and the Minnesota Department of Natural Resources released the final eight permits for the project.
Line 3, built in the 1960s, ships crude from a Canadian oil hub in Edmonton to U.S. Midwest refiners and currently carries less oil than it was designed for because of age and corrosion. Replacing it would allow Calgary-based Enbridge to roughly double its capacity to 760,000 barrels per day.
The project still needs final permits and authorizations before construction can begin. The Canadian portion is complete, but Enbridge has run into repeated obstacles in Minnesota, where reviews have lasted about five years.
If Enbridge can get the federal 404 water permit from the U.S. Army Corps of Engineers, contraction can begin and pipeline startup would be positive for all Canadian producers, as well as U.S. Mid-Continent and Gulf Coast refiners, Credit Suisse analyst Manav Gupta said in a note.
See also: Keystone pipeline investment a hedge against Trudeau ‘political risk,’ Kenney says
With files from staff and wires
David Leeder