A roundup of some of the North American equities making moves in both directions
On the rise
The construction company reported revenue and adjusted EBITDA of $1.077-billion and $84-million, respectively, easily exceeding the Street’s projections of $938-million and $60-million.
Desjardins Securities analyst Benoit Poirier said: “Bottom line, we are very pleased with the strong results posted across the board. We continue to believe that ARE is well-positioned to emerge a stronger company from the pandemic given its robust balance sheet and market-leading position in the Canadian construction industry as government entities turn to infrastructure spending as a form of economic stimulus. We encourage investors to revisit the story and buy the shares [Friday] morning.”
Onex Corp. (ONEX-T) was up after it reported its fourth-quarter profit rose compared with a year ago, helped by gains in its private equity and credit investments.
The Toronto-based private equity manager says it earned a net profit of US$597-million or US$6.61-per diluted share for the quarter ended Dec. 31.
The result compared with net earnings of US$187-million or US$1.86 per diluted share in the fourth quarter of 2019.
Onex reported segment net earnings — which exclude certain items — of US$708-million or US$7.72 per diluted share for its fourth quarter, up from US$211-million or US$2.04 per diluted share a year earlier.
With the deal, the Calgary-based company will establish its fourth U.S. Regional Operating Center in Idaho Falls, Id.
ATB Capital Markets analyst Nate Heywood said: “The business is strategically located in the fast-growing markets of Idaho and western Wyoming, operating an aggregate 58 retail stations (19 company-owned and 39 retail dealers), further bolstered by terminal operations, including 30 million litres of terminal storage and capacity for 88 rail cars. Overall, we view the transaction positively given the addition of a fourth ROC and a clear runway for additional growth in the Pacific Northwest. While the contributions from the business are expected to be relatively modest on a corporate level, the acquisition is material to the U.S. business.”
Plant-based meat maker Beyond Meat Inc. (BYND-Q) said on Thursday that it has signed multi-year supply deals with McDonald’s Corp and Yum! Brands Inc , sending shares up despite reporting quarterly sales and a loss that widely missed analyst expectations.
The plant-based meat industry has developed a frenzied following in recent years, and companies like Beyond Meat and rival Impossible Foods are among top players competing aggressively for deals with major food chains to build on this momentum. A deal with McDonald’s, in particular, is highly coveted in the industry.
Beyond Meat said its three-year global deal with McDonald’s would make it the world’s biggest restaurant chain’s preferred supplier for the patty in its new McPlant burger. The two companies will also develop other menu items like plant-based chicken, pork and eggs.
The maker of the Beyond Burger said it plans to create products over the next several years with Yum! Brands for its KFC, Pizza Hut and Taco Bell menus.
Beyond Meat reported an increase in net sales of 3.5 per cent to US$101.9-million in the period ended Dec. 31, short of analysts’ forecast of US$104.8-million, according to Refinitiv IBES data.
Home-sharing site Airbnb (ABNB-Q) saw gains after it posted a US$3.9-billion loss in the fourth quarter of 2020 as it suffered from the pandemic downturn in travel and recorded one-time costs for becoming a public company.
In results released Thursday — Airbnb’s first as a publicly traded entity — the company took a charge of US$2.8-billion for stock compensation related to the IPO. A year earlier, Airbnb lost US$352-million.
Revenue fell 22 per cent to US$859-million in the quarter that ended Dec. 31. Nights booked fell 39 per cent from a year earlier.
Airbnb declined to offer a forecast for 2021 profit and revenue. Company executives said they are upbeat about a recovery, but they said the unknown pace of vaccinations make it difficult to know how quickly people will be willing to travel. The company did say revenue will not decline as much in the current quarter as it did in the fourth quarter of last year.
Food delivery company DoorDash Inc. (DASH-N) was higher in the wake of forecasting orders to decline in the back half of the year as COVID-19 vaccine rollouts speed up and consumers begin to venture out nearly a year after staying indoors.
San Francisco-based DoorDash’s shares posted a bigger quarterly loss in its first results as a public company following its blockbuster initial public offering last year.
The company, which rivals Uber Eats, GrubHub Inc and Postmates Inc, saw sales boom as consumers heavily depended on ordering in due to government-ordered restrictions and fearing they would contract the coronavirus.
DoorDash’s growth during the pandemic implies consumers are willing to spend a few extra dollars for the convenience. But the vaccine rollouts speeding up and consumers returning to stores would coincide with seasonally softer second and third quarters, it said.
“Our forecast assumes increasing consumer churn, reduced order frequency at the cohort level, and slightly smaller average order values beginning in Q2,” Chief Executive Officer Tony Xu wrote in a letter to shareholders.
For the current quarter, it forecast gross order value to be in a range of US$8.6-billion to US$9.1-billion. In the fourth quarter ended Dec. 31, they rose 227 per cent to US$8.2-billion.
The company also forecast first-quarter adjusted earnings before interest, taxes, depreciation, and amortization to take a hit from recently imposed caps on fees it collects from restaurants.
Fourth-quarter revenue rose more than tripled to US$970-million. But net loss widened to US$312-million from US$134-million a year earlier.
On the decline
Pembina Pipeline Corp. (PPL-T) was down after saying it could no longer specify a future start date for the proposed Jordan Cove liquefied natural gas (LNG) export plant in Oregon.
It recognized a $1.6-billion impairment in the value of certain assets, including a petrochemical project, investments in the Wyoming-to-Oregon Ruby gas pipe and Jordan Cove.
“We believe the time for these projects may come; however, we can sadly no longer predict with certainty when that time will be,” the company said.
The US$8-billion Jordan Cove is one of several major energy projects that received strong support from former U.S. President Donald Trump but have since failed to move forward.
In a research note, RBC Dominion Securities analyst Robert Kwan focus on the Calgary-based company’s “optimistic” outlook for 2021.
Mr. Kwan said: “Pembina made a number of statements with respect to what has unfolded so far in 2021, including: (1) physical throughput remains stable and is trending upward; (2) with many of its systems currently operating at, or near, take-or-pay levels, there is “tremendous” operating leverage to rising volumes; and (3) strong commodity prices year-to-date provide “a further degree of cautious optimism” for 2021 in terms of both volume growth and marketing activities.
“The company continues to evaluate the Peace expansions (i.e., Phase VIII and Phase IX) as well as the Prince Rupert Terminal expansion and it expects to make a decision in H2/21 on whether to re-activate those projects. While Pembina has a bias toward core growth projects, EBITDA above the low end of its $3.2–3.4 billion 2021E guidance range (unchanged) would provide discretionary cash flow that could also be used for debt reduction, dividend increases, or share buybacks. With that, the company is putting in place a normal course issuer bid (NCIB) to purchase up to 5 per cent of its outstanding shares (i.e., up to 27.5 million). At this point, we view the NCIB as providing optionality, but we do not expect material action, if any, until H2/21 at the earliest.”
It reported normalized earnings per share of 53 cents, down from 70 cents during the same period a year ago but above the Street’s 46-cent projection.
Analyst Nate Heywood of ATB Capital Markets said: “Overall, we view the print as neutral to modestly positive given Adjusted EBITDA was reported in line with expectations; however, we would note the Company’s strong performance in Q4/20 drove FY2020 Normalized EPS to $1.42 through the high end of its guidance range of $1.30. The business continues to be supported by the overall stability and predictability of its Utilities segment, which we expect to benefit from the current emphasis on accelerated pipe replacement programs and system betterment. With this update, the Company has reiterated its previously issued Adjusted EBITDA guidance of $1.40-$1.50-billion (ATB estimate: $1.47-billion) and Normalized EPS of $1.45-$1.55 (ATB estimate: $1.50).”
Wireless carrier AT&T Inc. (T-N) was lower after saying will sell about a third of its stake in satellite TV unit DirecTV to buyout firm TPG Capital and spin off the business it bought for US$68-billion less than six years ago.
The newly created “New DirecTV”, which includes DirecTV, AT&T TV and U-verse video services, has an enterprise value of US$16.25-billion, including debt, the companies said in statement.
Over the years, the satellite TV unit has lost subscribers to popular online streaming options like Netflix and Amazon’s Prime Video.
AT&T is also under pressure to cut its debt pile of US$147.5-billion as it invests more in 5G and other wireless services.
The deal is expected to close in the second half of 2021.
With files from staff and wires