A roundup of some of the North American equities making moves in both directions
On the rise
Shares of Aritzia Inc. (ATZ-T) soared after the Vancouver-based clothing retailer beat expectations the Street’s expectations for its third quarter, seeing its profits jump on a 75-per-cent increase in revenues.
After the bell on Wednesday, it said it earned $39.8-million for the three months ended Aug. 29, up from a loss of $900,000 a year earlier.
Adjusted income for the second quarter was $44.4-million or 39 cents per share, up from $1-million or one cent per share in the year-ago period and 18 cents per share a year earlier.
Revenues reached $350.1-million, compared with $200.2-million in the second quarter of 2020 as comparable sales grew 60 per cent to exceed pre-pandemic levels.
Aritzia was expected to earn 21 cents per share in adjusted profit on $296.2-million in revenues, according to financial data firm Refinitiv.
The company says its e-commerce revenue increased 49 per cent in the quarter, on top of the 82 per cent growth it saw in the second quarter of last year.
“The strength of our business across all geographies and all channels continues through the start of the third quarter. Looking ahead, expansion in the United States will be a leading driver of our growth,” stated founder, CEO and chairman Brian Hill.
Aritzia says it expects net revenues of $350-million to $375-million in the third quarter despite supply chain disruptions, labour shortages and the ongoing indirect effects of COVID-19.
Barrick Gold Corp. (ABX-T) saw gains after it reported a nearly 5-per-cent rise in third-quarter gold production from the previous three months, as output jumped at its Veladero mine in Argentina.
Barrick, the world’s second-largest gold miner by reserves, also reiterated its annual output forecast, saying that fourth-quarter production was set to be the strongest of the year.
In the three months ended Sept. 30, total preliminary gold production rose to 1.09 million ounces, from 1.04 million ounces in the previous quarter. Analysts had expected a figure of 1.14 million ounces, Refinitiv data showed.
The output was underpinned by a nearly 55-per-cent jump in production of the yellow metal at the Veladero mine after it commissioned expansion works at the site.
The miner’s copper production rose 4.16 per cent sequentially to 100 million pounds.
The company said the third-quarter realized copper price was expected to be 5 per cent to 7 per cent below the average market price of $4.25 per pound, mainly due to adjustments that reflect the downward trend in copper prices during the quarter.
It estimated all-in sustaining costs, a key industry metric, to be 4 per cent to 6 per cent lower sequentially for both gold and copper.
It also said output at the Hemlo mine in Canada was expected to be below its annual outlook as the ramp-up of underground development had slowed due to COVID-19 movement curbs.
Barrick, which hopes to restart the Porgera gold mine in Papua New Guinea this year after resolving a standoff with the government, is slated to report third-quarter results on Nov. 4.
Canopy Growth Corp. (WEED-T) increased in response to saying it would buy weed gummies maker Wana Brands for US$297.5-million, as the world’s biggest pot producer looks to expand in the U.S. cannabis market.
Canadian pot producers are looking at cross-border expansion, as the industry has garnered investor interest with some U.S. states legalizing pot and on increased expectations for federal marijuana reform.
Demand for pot edibles such as gummies has risen during the pandemic, as people stuck at home turn to cannabis-related products for relaxation and entertainment.
Wana sells gummies in the U.S. state of Colorado and licenses its intellectual property to partners who manufacture, distribute and sell Wana-branded gummies in states including California, Arizona, Illinois, Michigan and Florida.
The acquisition will provide Canopy access to Wana’s vertically integrated facility in Colorado and its licensing division, the company said, adding that it would continue operating independently in the state until the deal closes.
The transaction is structured as three separate option agreements allowing Canopy Growth a call option to acquire 100 per cent of the membership interests in each Wana entity, the company said in its statement.
Freshii Inc. (FRII-T) was up after saying it has signed a deal to buy a majority stake in health and wellness product retailer Natura Market ECommerce Inc., with rights to acquire the rest of the business through the first quarter of 2025.
The Toronto-based company says it will pay $5.7-million plus potential performance incentives in return for the initial 60-per-cent stake.
It says the price for the remaining shares will be based on the company’s earnings before interest, taxes, depreciation, and amortization for the relevant period.
Freshii, which operates restaurants and sells nutritional supplement products in-store and online, says the deal marks a milestone in its expansion into the e-commerce wellness market.
Natura Market, which recorded over $19-million in sales over the last 12 months and has no debt, will be run as a standalone business unit with the company’s founder, Shakhzod Khabibov, staying on as president.
Matthew Corrin, founder and CEO of Freshii, says Natura Market will make an immediate positive impact on Freshii’s overall business.
Morgan Stanley (MS-N) increased in the wake of reporting a bigger third-quarter profit than expected, as it closed more deals and generated a record US$1.27-billion from advisory business during the three months.
The Wall Street bank benefited from global mergers and acquisitions touching a new high, with deals totaling US$1.52-trillion being announced in the three months ended Sept. 27.
The figure represents a growth of 38 per cent year-over-year, higher than any quarter on record, as per Refinitiv data.
Morgan Stanley is positioned third in the global M&A league tables, which rank financial services firms based on the amount of M&A fees they generate, trailing behind rivals Goldman Sachs Group Inc and JPMorgan Chase & Co.
Institutional securities, which houses the sales and trading and investment banking units, the bank’s largest reporting lines, generated net revenue of US$7.5-billion, up around 22 per cent from a year earlier.
Revenue from its investment banking unit, comprising advisory, equity and fixed income underwriting businesses, came in at US$2.85-billion, compared to US$1.71-billion a year ago.
Net income applicable to common shareholders rose to US$3.58-billion, or US$1.98 per share, in the three months ended Sept. 30, from US$2.6-billion, or US$1.66 per share, a year earlier.
Analysts were expecting a profit of US$1.68 per share, according to Refinitiv data.
Net revenue rose to US$14.75-billion in the third quarter, compared with US$11.72-billion a year earlier.
U.S.-listed shares of Taiwan chip giant TSMC (TSM-N) was up after it announced on Thursday plans to build a new factory in Japan to meet long-term appetite for chips and said, near-term, tight supplies will likely continue into 2022 amid booming demand during the COVID-19 pandemic.
TSMC, the world’s largest contract chipmaker and a key supplier to Apple Inc, said it would set up a chip plant in Japan that will use older chipmaking technology, a segment currently under a severe supply shortage due to robust demand from automakers and tech companies. But production from the plant is only likely to begin by late 2024.
The company and Taiwan in general have become central in efforts to resolve a pandemic-induced global chip shortage, which has forced automakers to cut production and hurt manufacturers of smartphones, laptops and consumer appliances.
“TSMC is working closely with our customers to plan our capacity and investing in leading edge and speciality technologies to support their demand,” Chief Executive Officer C. C. Wei told an online earnings briefing, after the company posted higher-than-expected profits in the third quarter.
He said the expansion plan in Japan was pending approval from the company’s board and declined to disclose details such as expenditure and capacity.
TSMC posted a net profit of T$156.3 billion (US$5.56-billion) in July-September, well above the T$149 billion average of 22 analyst estimates compiled by Refinitiv. That was 13.8% higher than the same period of last year.
Advanced chips made by TSMC, formally known as Taiwan Semiconductor Manufacturing Co, are used in everything from high-end smartphones like Apple’s newly unveiled 5G iPhone 13, to artificial intelligence, cars and a wide variety of lower-end consumer goods.
UnitedHealth Group Inc. (UNH-N) increased with it raising its full-year adjusted profit forecast after beating analysts’ estimates for third-quarter earnings, helped by a jump in revenue from its Optum unit that manages drug benefits.
The Optum business, which offers healthcare data analytics services, has been driving growth for the company when U.S. health insurers are wrestling with fluctuating medical costs since the coronavirus outbreak.
For the three months ended Sept. 30, UnitedHealth reported a medical loss ratio - the percentage of premiums paid for medical services - of 83.0 per cent, worse than 81.9 per cent a year earlier. Analysts had expected 83.5 per cent.
Revenue from the Optum unit rose 13.9 per cent to US$39.8-billion. The segment has reported revenue growth for at least the last four consecutive quarters.
UnitedHealth’s core business that sells health insurance plans brought in US$55.9-billion in sales, an 11-per-cent rise from a year earlier, buoyed by higher enrollment across health plans, including its Medicare Advantage plans for older Americans and the disabled.
Excluding items, the company reported earnings per share of US$4.52, beating analysts’ estimate of US$4.41, according to Refinitiv IBES data.
UnitedHealth raised its 2021 adjusted earnings per share forecast to a range of US$18.65 to US$18.90, from US$18.30 to US$18.80 earlier.
Citigroup Inc. (C-N) was narrowly higher after it reported a 48-per-cent jump in third-quarter profit that comfortably beat market estimates, as the bank released loan loss reserves and reaped a windfall of fees from equity underwriting and investment banking advice.
For the three months ended Sept. 30, net income jumped 48 per cent to US$4.6 billion, or US$2.15 per share, from US$3.1-billion, or US$1.36 per share, a year earlier. Analysts on average had expected a profit of US$1.65 per share, according to Refinitiv IBES data.
The bank’s profits were buoyed by its decision to take down US$1.16-billion of loss reserves built during the pandemic for potentially sour loans that have not materialized. A year earlier Citigroup had added US$436-million to its reserves.
Investment banking revenue increased 39 per cent to US$1.9-billion, helping offset a 16-per-cent decline in fixed-income revenue from a year earlier when there was unprecedented volatility in the markets.
Higher expenses and lower net interest revenue weighed on results as did customers using their stimulus checks to pay down their credit card loans.
“I am quite pleased with $4.6 billion in net income given the environment we are operating in,” Chief Executive Officer Jane Fraser said in the results announcement.
Deere & Co. (DE-N) erased early losses as more than 10,000 of its workers went on strike Thursday after “the company failed to present an agreement that met our members’ demands and needs,” the United Auto Workers union said in statement.
The union had said its members would walk off the job if no deal has been reached by 11:59 p.m. Wednesday. The vast majority of the union rejected a contract offer earlier this week that would have delivered 5% raises to some workers and 6% raises to others.
“The almost one million UAW retirees and active members stand in solidarity with the striking UAW members at John Deere,” UAW President Ray Curry said.
Brad Morris, vice president of labor relations for Deere, said in a statement that the company is “committed to a favorable outcome for our employees, our communities and everyone involved.” He said Deere wants an agreement that would improve the economic position of all employees.
“We will keep working day and night to understand our employees’ priorities and resolve this strike, while also keeping our operations running for the benefit of all those we serve,” Mr. Morris said.
Walgreens Boots Alliance Inc. (WBA-Q) increased despite its fourth-quarter results beating estimates on higher U.S. and UK pharmacy store sales due to the easing of pandemic-related restrictions and people getting COVID-19 vaccines at its stores.
The company has administered more than 40 million COVID-19 vaccines and over 16 million tests to date, it said.
Same-store sales at its U.S. pharmacies rose 8.8 per cent in the fourth quarter, which included a 485 basis point boost from COVID-19 vaccinations, the company said. Walgreens filled 313 million prescriptions during the quarter.
Net income attributable to the company was US$627-million, or 72 US cents per share, for the quarter ended Aug. 31, compared with a profit of US$373-million, or 43 US cents per share, a year earlier.
Excluding items, the company earned US$1.17 per share, compared with Refinitiv IBES estimates of US$1.02 per share.
Revenue rose to US$34.26-billion from US$30.37-billion, while analysts on average had estimated US$33.30-billion.
Shares of Domino’s Pizza Inc. (DPZ-N), which have risen more than 24 per cent this year, saw further gains after it posted on Thursday its first drop in U.S. same-store sales in over a decade, signaling a slowdown in delivery demand for the world’s largest pizza chain as consumers move away from their pandemic food-ordering habits.
As COVID-19 curbs ease, Americans, who spent the last year ordering in, have started to eat out at restaurants, slowing sales at Domino’s that gets most of its business from deliveries and take-away orders.
Same-store sales at the company’s U.S. restaurants fell 1.9 per cent during the reported quarter, compared with estimates of a 1.89-per-cent increase, according to IBES data from Refinitiv. Its U.S. same-store sales had jumped 17.5 per cent a year ago.
Domino’s performance could set the tone for earnings from other fast-food chains who benefited heavily during lockdowns, with customers now turning to traveling and dining outdoors.
A severe labour crunch in the United States also threatens businesses of fast-food chains, as a lack of workers could push restaurants to limit operating timings or capacity.
The bright spot in Domino’s results was its international business, where same-store sales grew 8.8 per cent, as customers globally continued to rely on food deliveries due to tougher COVID-19 curbs. Analysts had expected the growth to be 7.97 per cent.
The pizza chain’s total revenue rose 3.1 per cent to US$998-million in the third quarter, missing analysts’ estimate of US$1.04-billion.
Its net income rose 21.5 per cent to US$120.4-million or US$3.24 per share in the quarter ended Sept. 12. Analysts on average expected a profit of $3.11 per share.
On the decline
Wells Fargo & Co. (WFC-N) was down after it beat quarterly estimates for profit on Thursday, as the bank released funds set aside to cover potential loan losses due to the pandemic and reined in costs tied to its years-old sales practices scandal.
The fourth-largest U.S. bank has been in regulators’ penalty box since 2016 as it looks to improve governance and oversight, with the Federal Reserve also capping its assets at US$1.95-trillion.
The lender, which has paid more than US$5-billion in civil and criminal penalties, reported a US$250-million hit for the third quarter after a top U.S. banking regulator fined it for shortcomings in its earlier efforts to pay back customers it had previously harmed.
Overall, non-interest expenses fell to US$13.3-billion from US$15.23-billion a year earlier.
The bank said non-personnel expense fell US$2-billion, or 30 per cent, largely driven by lower restructuring charges and operating losses and lower COVID-19-related costs among others.
According to Refinitiv estimates, Wells Fargo earned US$1.22 per share excluding items, compared with the consensus estimate of 99 US cents per share.
Total revenue fell 2 per cent to US$18.8-billion.
Boeing Co. (BA-N) was lower in the wake of a Wall Street Journal report that it is dealing with a new defect on its 787 Dreamliner that involves certain titanium parts that are weaker than they should be.
The defect is on 787s built over the past three years, the report said.
This comes as the planemaker continues to grapple with structural defects in the 787, which have caused it to cut production and halt deliveries.
Boeing did not immediately respond to a Reuters request for comment. The WSJ report did not give any further details on the defect.
Last month, the Journal had reported that Boeing’s delivery of 787 Dreamliners will likely remain halted until at least late October as the U.S. Federal Aviation Administration has rejected the company’s recent proposal to inspect them.
With files from staff and wires