A roundup of some of the North American equities making moves in both directions
On the rise
Alimentation Couche-Tard Inc. (ATD.B-T) rose on Friday after France all but killed off a possible $20-billion takeover of Carrefour by the Quebec-based company, saying it would oppose any deal to ensure the security of its food sector.
The French government’s intervention, with ministers shooting down the offer less than 24 hours after talks were confirmed, sparked disquiet in some business circles given the sector has not previously been seen as a “crown jewel”.
Some politicians and bankers said the pushback could tarnish French President Emmanuel Macron’s pro-business image, while others highlighted that the COVID-19 crisis had forced more than one country to redefine its strategic national interests.
“Food security is strategic for our country so that’s why we don’t sell a big French retailer,” Finance Minister Bruno Le Maire told BFM TV.
“My answer is extremely clear: we are not in favour of the deal. The no is polite but it’s a clear and final no.”
Cogeco Inc. (CGO-T) was up after it reported its first-quarter profit rose compared with a year ago as its revenue also climbed.
The company says its profit attributable to owners of the corporation totalled $40.5-million or $2.53 per diluted share for the quarter ended Nov. 30, up from $31.3-million or $1.94 per diluted share a year earlier.
Revenue was $646.4-million, up from $618.5-million.
Cogeco owns radio broadcaster Cogeco Media as well as a controlling interest in Cogeco Communications Inc., a cable company with operations in Canada and the United States.
Cogeco Communications Inc. (CCA-T) was also higher after it reported a profit attributable to owners of the corporation of $106.7-million or $2.22 per diluted share for the quarter ended Nov. 30, up from $84.2 million or $1.70 per diluted share a year earlier.
Revenue at Cogeco Communications totalled $618.9-million, up from $586.8-million.
In a research note, Canaccord Genuity analyst Aravinda Galappatthige said: “Cogeco reported Q1/21 results last night with revenue and EBITDA above expectations, US subscriber stronger than expected, but Canadian subscribers a bit weaker. The company opted to revise its guidance for F21, now including the 3-per-cent positive impact from the DERY acquisition. This moves its revenue and EBITDA outlook from low single-digit growth to mid-high single-digit percentage growth.”
On the decline
Citigroup Inc. (C-N) lost ground in the wake of reporting a 7-per-cent decline in fourth-quarter profit on Friday but beat Wall Street expectations, as an improving economic outlook allowed it to release cash it had previously set aside for bad loans.
The US$900-billion stimulus package passed in December and the incoming Biden administration’s plan to inject US$1.9-trillion to support households and small businesses has boosted confidence that banks will be able to ride out the COVID-19 pandemic without widespread losses.
Citi, which named Jane Fraser as chief executive, the first woman CEO for a Wall Street bank, released US$1.5-billion from its loan loss reserves, to which it had added more than US$10-billion earlier this year.
Overall, the New York-based bank reported profit of US$4.63-billion, or US$2.08 a share, down from US$5-billion, or US$2.15 a share, a year earlier. Analysts on average had expected profit of US$1.34 per share, according to Refinitiv data.
Outgoing Chief Executive Officer Michael Corbat said the bank intended to resume buybacks in the first quarter on 2021.
JPMorgan Chase & Co. (JPM-N) was lower in the wake of reporting a much better-than- expected jump in fourth-quarter profit on Friday as it released some of the cash it had built up against coronavirus-driven loan losses and benefited from continued strength in its trading and investment banking units.
For most of last year, Main Street lenders grappled with the economic fallout of the pandemic and set aside tens of billions of dollars to cover loans that could go bust as businesses shuttered and unemployment surged.
The pandemic also caused a plunge in short and long-term interest rates that hurt interest income, but the Wall Street arms of the biggest banks benefited from volatility in global financial markets, a rush for stock market listings and emergency corporate fundraising.
JPMorgan’s net income rose 42 per cent to US$12.1-billion, or US$3.79 per share, in the quarter ended Dec. 31, from US$8.5-billion, or US$2.57 per share, a year earlier. Revenue rose 3 per cent to US$30.2-billion. During the quarter, it released credit reserves of US$2.9-billion, adding 72 US cents to its earnings per share.
Excluding the reserves, the bank reported net income of US$9.9-billion, or US$3.07 per share, which was well ahead of the average Wall Street estimate of US$2.62 per share, according to Refinitiv.
Investment banking revenue surged 37 per cent to US$2.5-billion, driven by higher advisory fees across all its products.
Looking forward, JPMorgan said in a slide presentation to analysts that it expects its non-interest expenses to go up in 2021 to about US$68-billion from US$65.5-billion, as it makes another US$1.5-billion of investments in its business and spends another US$900-million on its technology.
The spending plan continues JPMorgan’s practice of using its financial heft as the biggest U.S. bank to expand its business and take market share from other lenders as it fights to hold off non-bank competitors.
Wells Fargo & Co. (WFC-N) declined despite reporting a surprise quarterly profit on Friday, as stabilizing credit costs helped offset the hit from low-interest rates meant to prop up the ailing economy during the COVID-19 pandemic.
The San Francisco-based bank reported net income of US$2.99-billion, or 64 US cents per share, for the quarter ended Dec. 31, compared with US$2.87-billion, or 60 US cents per share a year earlier.
Analysts had expected a profit of 60 US cents per share on average, according to the IBES estimate from Refinitiv.
Costs associated with bad loans decreased US$823-million compared to last year and remained far below the level seen in the first half of the year when the bank racked up more than US$14-billion in provision expenses.
Other costs remained elevated at the bank, which has been in the regulators’ penalty box since 2016. Rising costs do not help as the banking industry deals with near-zero interest rates and slower loan growth.
Walt Disney Co. (DIS-N) slid in the wake of announcing Disneyland is ending its annual pass program 10 months after the theme park shut down because of the coronavirus pandemic, the theme park said Thursday.
The park in Anaheim, California, said it would begin issuing pro-rated refunds to eligible passholders.
“Due to the continued uncertainty of the pandemic and limitations around the reopening of our California theme parks, we will be issuing appropriate refunds for eligible Disneyland Resort Annual Passports and sunsetting the current program,” Ken Potrock, president of Disneyland Resort, said in a statement. He said the park will develop new membership offerings for when it can reopen.
Disney officials would not say how many people hold these passes or how much the move will cost the company.
The announcement comes the same week that Disneyland allowed county health officials to use its parking lot for a large-scale coronavirus vaccination site.
Exxon Mobil Corp. (XOM-N) fell after the Wall street Journal reported on Friday the U.S Securities and Exchange Commission has launched an investigation following a whistleblower complaint that the oil major overvalued a key asset in Texas’ Permian Basin,
Several people involved in valuing the asset, during an internal assessment in 2019, said employees were being forced to use unrealistic assumptions about how quickly the company could drill wells there to arrive at a higher value, the report said.
The SEC began investigating the claims after receiving the complaint, and at least one of the employees who complained was fired last year, WSJ reported, citing people familiar with the matter.
The Journal in September reported that there had been internal disagreements over the valuation.
Some Exxon managers in 2018 had initially pegged the net present value of the Delaware Basin in Permian at about US$60-billion. But a few employees involved in Exxon’s annual development planning estimated the value was closer to US$40-billion during the summer of 2019, WSJ said.
The largest U.S. oil producer has posted losses in the first three quarters of 2020 on an ill-timed spending increase that collided with a downturn in fuel demand and prices. To cope, the company has cut employees and project spending.
Walmart Inc. (WMT-N) was down after a regulatory filing showed Chief Executive Officer of U.S. e-commerce Marc Lore will be stepping down from his role at the end of the month.
Mr. Lore was the co-founder of Jet.com, which Walmart acquired in 2016 to bolster its e-commerce ambitions and was later absorbed into the retail giant’s own online business.
The move comes at a crucial time for Walmart’s online business, as sales on the company’s website and app soar with more people avoiding store visits over fears of the spreading coronavirus.
The company said it has unified its store and e-commerce teams, and the combined U.S. omni-channel business will report to Walmart U.S CEO John Furner from Feb. 1.
Spotify Technology SA (SPOT-N) dropped after Citigroup downgraded its shares to “sell” saying the music-streaming platform’s investments into podcasts have not materially impacted app downloads or premium subscriptions.
Jason Bazinet said: “Among four subscription based stocks - Spotify, Roku, Netflix and SiriusXM - Spotify is the only firm where the Street’s long-term forecasts (through 2023) do not comport to the prevailing valuations. We suspect this disconnect stems from recent enthusiasm around Spotify’s recent podcast pivot. But, the cadence of Premium gross additions (though 3Q20) and app download data (through 4Q20) do not show any material benefit from recent podcast investments (that began in 2019).”
With files from staff and wires