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A survey of North American equities heading in both directions

On the rise

Shares of Telus Corp. (T-T) were higher by 3 per cent on Friday after it reported higher fourth-quarter profit and revenue as it added new wireless customers.

The Vancouver-based telecom had $310-million of profit in the three-month perioded ended Dec. 31, up 17 per cent from a year earlier when it had $265-million of profit.

Its quarterly revenue came to $5.2-billion, up 2.8 per cent year-over-year from $5.06-billion.

The profit amounted to 20 cents per share, up from 17 cents per share.

After adjusting for items such as restructuring costs and unrealized appreciation from its virtual power purchase agreements with renewable energy projects, the telecom giant had $341-million per share of profit, or 24 cents per share.

Analysts were expecting 23 cents per share of earnings and $5.24-billion of revenue, according to the consensus estimate from S&P Capital IQ.

Telus added 126,000 net new mobile phone customers during the quarter.

- Alexandra Posadzki

TFI International Inc. (TFII-T) gained 0.6 per cent following the release of fourth-quarter results that exceeded the Street’s expectations.

After the bell on Thursday, the Montreal-based transportation and logistics company reported adjusted EBITDA of US$321-million and earnings per share of US$1.71, topping analysts’ forecast of US$310-million and US$1.67.

“Overall, we are taking a mixed view on today’s results,” said RBC’s Walter Spracklin. “On one hand, results came in ahead of consensus expectations), with FCF of $244-million (RBC estimate: $175-million; consensus. $156-million) being a particular standout. On the other hand, LTL [less-than truckload] results came in below our expectations in the quarter, a potential negative, especially within the context of recent U.S. peer reporting. However, while LTL has been an important driver of sentiment in the shares, we note that management highlighted improving service metrics in the press release (cargo claims ratio of 0.5 per cent for U.S. LTL, down from 1.5 per cent a year earlier), a positive in our view and key driver of pricing longer-term.”

TFI chief executive Alain Bedard said the company stands to benefit in 2024 from its recent acquisition of JHT Holdings Inc., and its acquisition of Daseke expected to close in the second quarter.

He added the company is seeking “highly strategic investment opportunities” as it looks ahead.

ARC Resources Ltd. (ARX-T) jumped 4 per cent after the release of positive fourth-quarter results, featuring stronger-than-expected production that led to a cash flow beat.

The Calgary-based company said it average 365,200 barrels of oil equivalent per day during the period, up 1 per cent from the previous quarter and above the Street’s forecast of 357,100 barrels. Cash flow per share of $1.16 topped the consensus estimate by 7 cents.

“ARX delivered strong Q4/23 results, with a slight production beat and Adjusted Funds Flow (AFF) and Free Cash Flow (FCF) well ahead of expectations on lower-than-expected cash costs and taxes,” said Scotia analyst Cameron Bean in a research note. “The company reiterated its full year 2024 guidance and provided Q1/24 production guidance that is in line with expectations. ARX also released strong year-end 2023 reserves results, with PDP bookings up 13 per cent per share on more than 2 times corporate recycle ratio and 2P reserves up 14 per cent per share on growth from Attachie, Kakwa and Sunrise. The Attachie project remains on track and on budget, with first volumes expected in late 2024. We continue to see ARX as a materially undervalued large-cap growth story with a clear catalyst on the horizon at Attachie.”

Fortis Inc. (FTS-T) closed 0.3 per cent higher in the wake of reporting a fourth-quarter profit of $381-million, up from $370-million a year earlier.

The electric and gas utility says the profit amounted to 78 cents per diluted share for the quarter ended Dec. 31.

The result compared with a profit of 77 cents per diluted share in the last three months of 2022.

Revenue for the quarter totalled $2.89-billion, down from $3.17-billion in the same quarter a year earlier.

On an adjusted basis, Fortis says it earned 72 cents per share, the same as its fourth quarter of 2022.

Fortis has 3.5 million utility customers in five Canadian provinces, 10 U.S. states and three Caribbean countries.

On the rise

Canadian auto parts supplier Magna International Inc. (MG-T) fell 6.7 per cent after it forecast its 2024 profit below estimates on Friday, as the industry navigates challenges originating from higher raw material prices and cooling demand for electric vehicles (EV).

Auto parts suppliers have been hit by a slowdown in demand for EV parts, as automakers scale back investments and shift focus to higher-margin hybrid and gas-powered vehicles.

The Aurora, Ont.-based company expects full-year profit in the range of US$1.6-billion to US$1.8-billion. Analysts on average were expecting a profit of US$1.90-billion, according to LSEG data.

On Thursday, peer BorgWarner (BWA-N) also forecast its 2024 profit and revenue below street expectations, on cooling demand for their parts as automakers cut back on their EV ambitions to protect margins.

On an adjusted basis, the company earned a profit of US$1.33 per share for the fourth quarter ended December 31, missing analysts’ expectations of US$1.48 per share.

Fourth-quarter sales rose 9.2 per cent to US$10.45-billion, in line with a Wall Street consensus.

Enbridge Inc. (ENB-T) declined 0.4 per cent after missing fourth-quarter profit estimates on Friday, hurt by lower tolls related to its Mainline crude pipeline system and a decrease in earnings from the company’s gas segment.

The pipeline operator reached a toll agreement for Mainline with oil shippers last year, which was lower than the previous one, after scrapping earlier plans for long-term contracts.

Quarterly adjusted core profit from Enbridge’s Mainline system was $1.30-billion, compared with $1.34 billion a year earlier.

The company reported a quarterly adjusted core profit of $833-million from its U.S. gas transmission unit, compared with $844-million a year earlier.

Natural gas demand in the United States has been low due to relatively mild weather conditions in the fourth quarter, impacting earnings for pipeline operators such as Enbridge.

Enbridge moves about 30 per cent of crude oil produced in North America and transports nearly 20 per cent of the natural gas consumed in the United States.

The company reported a quarterly profit of $1.73-billion, compared to a loss of $1.07-billion a year earlier.

On an adjusted basis, the company earned 64 cents per share, compared with analysts’ estimates of 68 cents per share, according to LSEG data.

Pot producer Canopy Growth Corp. (WEED-T) was down by 3.2 per cent after it reported a smaller third-quarter loss on Friday, helped by cost cuts and an increase in revenue from its Canada business.

Cannabis companies have been cutting costs and taking measures to reduce inventory to preserve cash and improve finances.

Pot producers witnessed a slowdown after the pandemic as consumers cut back on spending amid elevated levels of inflation and on tough competition from illegal sellers.

Canopy Growth said on Friday its Canadian business-to-business net revenue rose 9 per cent, while medical revenue climbed 11 per cent.

The company’s gross margin for Canada cannabis segment improved to 28 per cent.

Canopy Growth had raised doubts about the company’s ability to continue as a going concern last year, as the company struggled to turn profitable and later sold its sports nutrition products unit Biosteel after seeking bankruptcy protection for it.

The company said it reduced overall debt by $69-million during the reported quarter.

Net loss attributable to the company fell to $216.8-million for the quarter ended Dec. 31, compared with a loss of $259.5-million a year earlier.

Saputo Inc. (SAP-T) dropped 2 per cent in the wake of releasing weaker-than-anticipated third-quarter results before the bell.

The Montreal-based company saw revenue fall 7 per cent year-over-year to $4.27-billion, below the Street’s expectation of $4.41. Adjusted earnings per share of 38 cents was a drop of 15 cents from the same period a year ago and a penny below the consensus.

“Compared with our estimates, the U.S. outperformed while Europe underperformed,” said Desjardins Securities’ Chris Li. “SAP took a non-cash goodwill impairment charge of $265-million for Australia and suspended its dividend reinvestment plan (DRIP). There were no major changes to management’s qualitative FY24 outlook. Market factors are expected to continue to weigh on results in the near term. As SAP approaches the completion of its major capital projects, it will start to benefit from increased operational efficiencies and cost reductions, particularly in the U.S..

“Overall, the results do not change our view. At 9 times NTM [next 12 month] consensus EV/EBITDA (near 10-year low), we believe SAP’s valuation largely reflects challenging market conditions in the near term (volatile dairy prices, negative U.S. market factors, tepid global dairy export demand etc). The earnings set-up for FY25 (CY24) should improve, supported by network optimization benefits (see update below), non-recurrence of duplicative costs, cycling through high-cost inventories (UK) and low-priced export contracts, improvement in export volumes, etc.”

PepsiCo Inc. (PEP-Q) m) dropped 09on Friday after its first-quarter revenue forecast came in a touch below investor expectations, signaling smaller social media platforms could be losing the battle to bigger players for ad dol.on Friday.

The soda and snacks giant’s net revenue fell 0.5 per cent to US$27.85-billion in the fourth quarter, compared to a 1.4-per-cent rise to US$28.40-billion analysts had expected, according to LSEG data.

PepsiCo is facing some push back as it went ahead with more frequent price hikes since the pandemic to fend off higher costs rising from supply chain disruptions.

The number of units sold by the company’s beverage business in the U.S. fell 8 per cent in November and was down 7 per cent in October and December, according to YipitData.

Carrefour, Europe’s largest food retailer, in January asserted it would not be stocking PepsiCo’s brands “due to unacceptable price increases.”

PepsiCo also forecast annual organic revenue growth of at least 4 per cent, compared to the 9.5-per-cent growth reported for fiscal 2023.

Average prices jumped 9 per cent in the quarter ended Dec. 30, while organic volume slipped 4 per cent.

“Category growth rates are normalizing as consumer behaviors largely revert to pre-pandemic norms and net revenue realization moderates as inflationary pressures are expected to abate,” CEO Ramon Laguarta said in a statement.

Still, PepsiCo beat fourth-quarter profit expectations and forecast annual core profit slightly above estimates betting on easing input and freight costs.

PepsiCo expects fiscal 2024 core earnings per share of US$8.15, compared to analysts’ expectations of US$8.14

The company also announced annualized dividend of US$5.42 per share, an increase from US$5.06.

On an adjusted basis, PepsiCo earned US$1.78 per share, beating estimates of US$1.72.

Pinterest Inc. (PINS-N) dropped 9.5 per cent on Friday after its first-quarter revenue forecast came in a touch below investor expectations, signaling smaller social media platforms could be losing the battle to bigger players for ad dollars.

The image sharing platform’s numbers come on the heels of strong advertising sales from Meta (META-Q) and Alphabet’s Google (GOOGL-Q), which have a greater ability to seize on the ad bounceback and the willingness of companies to spend more.

“When advertisers are thinking hard about where to put their money, they’re looking to make the biggest bang for their buck and at the moment that’s with huge players like Meta and Alphabet which does leave smaller players like Snap and Pinterest fighting over what’s left,” said Danni Hewson, head of financial analysis at AJ Bell.

Revenues of other ad-reliant companies like New York Times , Fox and Interpublic were also hit during the October-to-December quarter, owing to a slowdown in advertising sales.

Pinterest was on track to lose more than US$2-billion of its market value on Friday, based on its premarket share price of US$37.01.

The company that has seen growing popularity with Gen Z, which is more than 40% of its user base, said it saw strong advertising spend from China and retailers, that was partially offset by weakness from the food and beverage category.

Revenue of US$981.3-million in the holiday quarter and first-quarter revenue forecast in the range of US$690-million to US$705-million, was below estimates, per LSEG data.

“The tech giants Meta and Amazon have set a high bar when it comes to revenues. So, even though Pinterest eked out double-digit growth, the slight miss on forecast was punished,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Wall Street remained positive on the quarterly results with at least 16 analysts raising their price targets on the Pinterest stock, boosting the median to US$43.15.

Pinterest trades at 29.15 times its 12-month forward earnings estimates, versus social media rival Snap’s 53.02 and Meta’s 23.06.

Shares of Expedia (EXPE-Q) plunged 17.8 per cent on Friday after the online travel firm said it expects 2024 revenue growth rates to moderate, as air fares soften from their post-pandemic highs.

The company late on Thursday also said Chief Executive Officer Peter Kern will step down from his position and will be replaced by company insider Ariane Gorin.

Booking Holdings (BKNG-Q), Tripadvisor (TRIP-Q), Trivago (TRVG-Q) and Airbnb (ABNB-Q) were also down on amplified concerns about moderating booking and uneven domestic travel demand following a rebound from pandemic lows.

On Thursday, Expedia warned that air travel revenue was under pressure due to a fall in average ticket prices.

“On a macro level, we expect travel demand to remain relatively healthy, but we expect growth rates across the world to decelerate,” outgoing CEO Kern said on the company’s earnings call.

Air travel revenue was also affected by the grounding of Boeing’s 737 Max 9 fleet, leading to multiple cancellations impacting its Vrbo brand.

“Overall, we see an ‘acceleration story’ that is decelerating with a CEO transition now in play; near-term setup looks challenging,” Wells Fargo analysts wrote in a note.

The company forecast its gross bookings growth for the current quarter to be in the low- to mid-single digits range and said it expects revenue growth to be in the mid-single digit.

“Expedia’s first-quarter guidance may have underwhelmed investors, with revenue growth expected to be in the mid-single digits range compared to the 9% consensus estimate,” CFRA analyst Siye Desta said.

However, the company reported a better-than-expected adjusted profits of US$1.72 per share on the back of resilient demand during the holiday season. Analysts on average had expected a profit of US$1.68 per share, according to LSEG data.

With files from staff and wires

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 04/03/24 4:00pm EST.

SymbolName% changeLast
Arc Resources Ltd
Canopy Growth Corp
Enbridge Inc
Expedia Group Inc
Fortis Inc
Magna International Inc
Pepsico Inc
Pinterest Inc
Saputo Inc
Telus Corp
Tfi International Inc

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