A roundup of some of the North American equities making moves in both directions
On the rise
Tim Hortons parent company Restaurant Brands International Inc. (QSR-T) was higher after its quarterly results topped estimates on Friday, as a reopening U.S. economy and government stimulus checks boosted spending at the company’s Burger King chain.
After a year of ordering in, more Americans have started to go back to restaurants as a US$1,400 stimulus payment from the government in March boosted spending, while the rollout of COVID-19 vaccines lifted consumer confidence.
Easing of dining room capacity restrictions and a warmer weather also led to a recovery in demand at Restaurant Brands’ outlets and those of rival companies, many of which are struggling to hire new workers to keep up with the jump in sales..
Burger King comparable sales rose 6.6 per cent in the United States. However, the rise was smaller than the 13.6-per-cent jump posted by larger rival McDonald’s Corp. (MCD-N) on Thursday.
McDonald’s sales surge was partly due to its new crispy chicken sandwiches that were rolled out earlier this year in the United States and compete directly with a similar offering from Restaurant Brands’ Popeyes fast-food chain.
U.S. same-store sales at the Cajun-inspired Popeyes rose just 1.5 per cent in the first quarter as it struggled to repeat last year’s explosive growth amid rising competition.
Total revenue at Restaurant Brands rose 2.9 per cent to US$1.26-billion in the first quarter ended March 31, beating analysts’ average estimate of US$1.25-billion, according to IBES data from Refinitiv.
Adjusted net income rose 13.2 per cent to US$257-million, or 55 US cents per share, beating estimates of 50 US cents per share.
Imperial Oil Ltd. (IMO-T) rose after it eeked out a first-quarter profit on Friday, after having slipped into a loss in the fourth, helped by higher prices for crude, as well as improved refining and chemical margins.
Calgary-based Imperial, which is majority-owned by Exxon Mobil Corp, is benefitting from higher global oil prices as fuel usage picks up from last year, when coronavirus pandemic-related lockdowns decimated demand.
The recovery, however, remains spotty with second and third waves of COVID-19 surging in various parts of the world, including Canada, and an uneven rollout of vaccines.
While demand has rebounded considerably, the lingering effects of the weak 2020 business environment has continued to have a negative impact on financial results in 2021 when compared to periods prior to the pandemic, Imperial said.
Net income in the company’s chemicals segment, however, climbed to $67-million in the quarter, up from $23-million in the previous.
Imperial posted a profit of $392-million, or 53 cents per share, for the quarter ended March 31, compared to a loss of $1.15-billion, or $1.56 per share, in the previous quarter.
In a research note, ATB Capital Markets analyst William Lacey said: “We view this quarter as a positive, as the Company has demonstrated the strength of the base business with strong results being posted across the board.”
AstraZeneca PLC (AZN-Q) was higher after saying early Friday its COVID-19 vaccine contributed US$275-million to first-quarter sales and shaved three cents per share from its earnings, as it posted better-than-expected results and forecast growth in the second half.
This is the first time the Anglo-Swedish drugmaker has given financial details of the distribution and sales of its vaccine, which it developed with Oxford University. It has said it will not make a profit from the shot during the pandemic.
Vaccine revenue included delivery of about 68 million doses, AstraZeneca said on Friday, adding that sales in Europe, where it faces a legal case, were US$224-million, in emerging markets US$43-million and US$8-million in the rest of the world.
Sales of US$275-million for 68 million doses equates to a price tag of around US$4 per shot.
The results come after a bruising start to the year as the drugmaker struggles with production of its vaccine and faces a legal battle after cutting deliveries to Europe, while regulators probe rare blood clots in people who got the shot.
AstraZeneca was one of the leaders in the global race to develop a COVID-19 vaccine. Its cheap and easily transportable shot was hailed as a milestone in the fight against the crisis, but has since faced a series of controversies.
On the decline
Fairfax Financial Holdings Ltd. (FFH-T) was down after saying it swung to an US$806-million profit attributable to shareholders in the first quarter on an increase in premiums as it donates millions of dollars to help India deal with increase in COVID-19 cases.
The Toronto-based insurance company, which reports in U.S. dollars, says it earned US$28.91 per diluted share, compared with a loss of US$47.38 per share or US$1.26-billion a year earlier.
Revenue for the three months ended March 31 was almost US$6-billion, up from US$3.16-billion in the first quarter or 2020.
A big part of the difference was an US$842-million gain on investments, versus a US$1.5-billion loss a year earlier.
Fairfax was expected to earn US$10.55 per share on US$5.8-billion of revenues, according to financial data firm Refinitiv.
Fairfax Financial, together with the Fairfax India Charitable Trust and Fairfax India Holdings Corp., committed US$5-million to fund initiatives to help India with the recent surge in COVID-19 cases.
Shares of Amazon (AMZN-Q) finished lower after it posted record profits from pandemic shopping and indicated sales would keep growing even as customers emerged from their homes in the reopening U.S. economy.
Since the start of the coronavirus outbreak, shoppers have relied increasingly on Amazon for delivery of home staples and supplies. While brick-and-mortar stores closed, Amazon has now posted four consecutive record quarterly profits, attracted more than 200 million Prime loyalty subscribers, and recruited over 500,000 employees to keep up with surging demand.
Amazon said it expects operating income for the current quarter to be between US$4.5-billion and US$8-billion, which assumes about US$1.5-billion of costs related to COVID-19.
Net sales climbed to US$108.5-billion in the first quarter ended March 31 from US$75.5-billion, beating analysts’ average estimate of US$104.5-billion, according to IBES data from Refinitiv.
Amazon, which saw its stock price nearly double in the first part of 2020 as it benefited from the pandemic, has this year underperformed the S&P 500 market index. Its shares were up about 8.5 per cent year to date versus the index’s 13-per-cent gain.
Top U.S. oil producer Exxon Mobil Corp. (XOM-N) was lower despite posting its first profit in five quarters, boosted by rising oil prices that offset costs from a February deep freeze in Texas.
Exxon and its rivals are seeing a lift from crude prices, up by a third this year, as economies start to recover from the pandemic and fuel demand increases.
Exxon is trying to recover from a historic annual loss last year and fend off a proxy fight over board seats at its annual shareholder meeting next month.
Net income attributable to Exxon was $2.73 billion, or 64 cents per share, in the first quarter, compared with a loss of $610 million, or 14 cents per share, a year earlier.
“The strong first quarter results reflect the benefits of higher commodity prices and our focus on structural cost reductions,” said CEO Darren Woods.
Exploration and production, Exxon’s largest business, earned $2.6 billion in the first quarter on higher oil prices, compared with a profit of $536 million a year earlier.
Chevron Corp. (CVX-N) dipped after its first-quarter profit fell 29 per cent from the same period a year ago as gains from oil and gas prices were undercut by weaker refining margins, production losses and the impact of an asset sale that benefited results last year.
Oil companies are generally enjoying a recovery in energy prices, up at least a third this year, after the pandemic hammered demand at the start of 2020. Chevron and its peers slashed spending, paving the way for several firms to post sharply better results.
But as European rivals topped forecasts, Chevron’s earnings declined on winter storm production losses, weaker margins and the absence of asset and tax items that benefited year-ago profit.
“Results were down from a year ago due in part to ongoing downstream margin and volume effects resulting from the pandemic and the impacts of winter storm Uri,” said Michael Wirth, Chevron’s chief executive officer.
A U.S. winter storm that halted some output cost US$300-million in lost production and repairs, said finance chief Pierre Breber. “That’s lost production in the Permian Basin and lost production in refining and chemicals,” he said.
Chevron, the second-largest U.S. oil producer, reported a profit of US$1.72-billion, or 90 US cents per share, compared with US$2.45-billion, or US$1.31 per share, a year earlier. Year-ago results included about US$680-million in asset sales and favorable tax items.
Net profit was US$1.4-billion, or 72 US cents a share, down from US$3.6-billion, or US$1.93 cents a share, a year earlier.
Twitter Inc. (TWTR-N) shares sank as it offered tepid revenue guidance for the second quarter, warned of rising costs and expenses and said user growth could slow as the boost seen during the coronavirus pandemic fizzles.
The social media company posted revenues and user numbers mostly in line with analyst estimates in stark contrast to the better performing digital ad firms like Facebook Inc and Alphabet Inc’s.
It said it expected second quarter revenue between US$980-million and US$1.08-billion, lower than Wall Street estimates of US$1.06-billion on average, according to IBES data from Refinitiv. It also said stock based compensation for new hires would be more than expected this year.
Twitter says it wants to reset after years of product stagnation, announcing in February bold goals to expand its user base, speed up new features for users, and double its revenue by 2023.
“The explosive growth that Twitter experienced during the pandemic is slowing rather rapidly in the aftermath of an eventful 2020 in which the microblogging site benefited immensely from the U.S. elections and a pandemic-driven surge,” said Haris Anwar, senior analyst at Investing.com.
Google and Facebook, the top two largest digital advertising platforms, both blew past revenue expectations in their first quarters. Advertisers consider both to have more ad formats and better ad targeting capabilities than Twitter. nd slightly higher than estimates of US$1.03-billion.
Google and Facebook, the top two largest digital advertising platforms, both blew past revenue expectations in their first quarters. Advertisers consider both to have more ad formats and better ad targeting capabilities than Twitter.
Twitter reported 199 million daily active users, up 20 per cent year-over-year, compared to analysts’ estimates of 200 million, according to FactSet data.
The San Francisco-based company repeated its warning that growth of its monetizable daily active users (mDAU) - its term for daily users who can view ads - could reach “low double digits” in the next quarters, likely hitting a low point in Q2.
Goodyear Tire & Rubber Co. (GT-Q) erased early gains and turned lower after posting quarterly profit and revenue that beat Wall Street estimates on Friday, as sales of its tires rose due to a rebound in auto demand.
The global tire industry was hit hard in 2020 as the coronavirus health crisis led to a sharp decline in demand for replacement tires and original equipment.
U.S. auto demand, however, has risen since then, as consumers focus on personal safety and opt for private vehicles during the COVID-19 pandemic. Low interest rates and stimulus checks are also aiding the rebound.
“We achieved these results despite the impact of a severe winter storm in the U.S. and industry supply chain challenges,” said Goodyear Chief Executive Officer Richard Kramer.
The company, whose brands include Kelly and Dunlop, said tire volumes rose 12 per cent to 35 million units in the quarter, while replacement tire volumes jumped 14 per cent.
Americas - Goodyear’s biggest market - benefited from strength in the U.S. consumer and commercial replacement market.
Excluding items, the company earned 43 US cents per share, beating estimates of 9 US cents, according to Refinitiv data.