A roundup of some of the North American equities making moves in both directions today
On the rise
Laurentian Bank Financial Group (LB-T) was up 2 per cent on Thursday after reporting slightly better-than-anticipated second-quarter results and increasing its dividend.
Before the bell, the bank reported net income of $43.3-million or 95 cents per share for the quarter, compared with net income of $59.2-million or $1.34 per share during the same period a year ago.
On an adjusted basis, net income totaled $48.7-million or $1.08 per share for the second quarter, compared with $64.6-million or $1.47 per share in the previous year. Analysts were expecting adjusted earnings to come in at $1.07 per share in the latest quarter.
“I am pleased to report that we successfully completed the negotiations of a collective agreement that supports performance, efficiency and growth. This strategically changes the business going forward," said president and CEO François Desjardins.
“This quarter’s performance continues to be impacted by transformation related investments and costs related to labour relations which can now be reduced. Management remains committed to achieve mid-term targets and ultimately, create long-term value for its shareholders."
The company raised quarterly common share dividend raised by a penny to 66 cents per share.
The recreational vehicle maker reported revenue and adjusted earnings per share for the quarter of $1.334-billion and 54 cents, respectively, exceeding the forecast on the Street of $1.25-billion and 51 cents.
The company also announced the launch of a substantial issuer bid to which it will offer to purchase for cancellation up to $300-million of its subordinate voting shares.
Desjardins Securities analyst Benoit Poirier said: “Overall, we expect a positive reaction in the market today in light of the strong results (solid beat across the board), increased FY20 guidance, robust retail growth and launch of the substantial issuer bid. Therefore, we recommend that investors buy shares to benefit from recent share price weakness."
Descartes Systems Group Inc. (DSG-T) was up 1 per cent after impressing the Street with its first-quarter results.
On Wednesday after the bell, the Waterloo, Ont.-based tech company reported revenue for the quarter of US$78-million, up 16 per cent year-over-year and beating the consensus projection on the Street of US$78.6-million. Adjusted EBITDA of US$28.7-million was an increase of 30 per cent and also ahead of expectations (US$28-million).
Raymond James analyst Steven Li said: “Unlike other businesses, an increasingly dynamic environment (trade wars, changing tariffs and duties, Brexit adding new borders etc.) can be a boon for DSG. With complexity comes increasing reliance on DSG to assist in managing global logistic networks. Similarly, the explosion of ecommerce is putting the onus on businesses to deliver products cost effectively and quickly to businesses and consumers. As such, there is increasing value in supply chain participants being able to connect with multiple parties on a single platform. DSG remains a great way to play the changes in the global trade landscape.”
The Virginia-based company said its forecast takes into account the impact of tariffs that have been imposed on Chinese imports, but does not account for a potential hit from additional levies.
“For fiscal 2019, our guidance includes the expectation that Section 301 tariffs will be 25% on List 1, 2, and 3 goods. However, our guidance does not include potential tariffs on List 4 goods,” it said.
Chief Executive Officer Gary Philbin said: “If tariffs on List 4 products are implemented, we expect that it will be impactful to both our business, and especially to consumers in general. Until we have more clarity, our outlook excludes the impact of tariffs on List 4 products. Our teams are doing an admirable job of controlling the controllables in running our business. We continue to believe we are well-positioned to capture the significant opportunity ahead of us as we focus on creating and driving value for our shareholders.”
The discount store operator cut its full-year earnings forecast to between US$4.77 and US $5.07 per share, including a 10 US cent hit from store closures and a 5 US cent impact from import freight costs. It has previously expecting earnings between US$4.85 to US$5.25 per share.
At the same time, rival Dollar General Corp. (DG-N) was up 7.2 per cent after reporting better-than-expected same-store sales growth.
The company announced a 3.8-per-cent increase, beating the average analyst estimate of a 2.88 per cent.
Net income rose to US$385-million, or US$1.48 per share, in the first quarter ended May 3, from US$364.9-million, or US$1.36 per share, a year earlier.
Transat At Inc. (TRZ-T) rose 0.8 per cent in response to a report its largest shareholder, investment manager Letko, Brosseau & Associates, plans to oppose Air Canada’s proposed $13 per share acquisition.
Desjardins Securities analyst Benoit Poirier said: “At this time, we believe the only suitor for TRZ is AC, as we believe it could be difficult for a financial partner (eg Groupe Mach, Pierre Karl Péladeau or FNC Capital) to offer a higher price since it would require the previously mentioned $150-million cushion to operate the business (currently considered as excess cash for a strategic partner such as AC), the break fee of $15-million and the $1.00 uplift needed to beat AC’s proposal. That said, we believe AC could still increase its offer to obtain final approval given the strong rationale for the transaction. … Bottom line, we remain confident that a deal will be finalized over the 30-day period of exclusive negotiations and recommend that investors wait for the final offer.”
On the decline
Tesla Inc. (TSLA-Q) dropped 0.9 per cent after a report that chief executive officer Elon Musk told employees in an e-mail the carmaker has “a lot of catching up” to do but still can achieve a record quarter
“While our demand is strong, we have a lot of vehicle deliveries to catch up to in order to have a successful quarter,” Mr. Musk said.
“Per my earlier e-mail, if we execute well, Q2 will be an all-time record for Tesla vehicle deliveries and an awesome victory!!”
On Thursday, an equity analyst at Barclays lowered his target for its stock, believing it is “stalling as a niche automaker."
National Bank of Canada (NA-T) was down 1 per cent despite announcing a 2-per-cent rise in second-quarter profit and raising its dividend, as strong growth in its domestic retail banking business offset weak results from financial markets, reports the Globe’s James Bradshaw.
For the three months that ended Apr. 30, National Bank reported profit of $558-million, or $1.51 per share, compared with $547-million, or $1.44 per share a year ago.
The bank’s earnings per share fell one cent shy of analysts’ consensus estimate of $1.52.
National Bank also raised its quarterly dividend by 3 cents to 68 cents per share, and announced plans to buy back up to 6 million shares.
The Calgary-based company maintained production guidance, which sees an increase from 300,000 barrels of oil equivalent per day in 2019 to 370,000 boe/d in 2023. However, it raised its aggregate cash flow by approximately $840-million to a total $3.05 billion.
In a research note released Thursday, Raymond James analyst Kurt Molnar said: "The market will undoubtedly focus on the new free cash flow but we would highlight the increase in expected ROIC as potentially even more important. More Gundy means increased revenue/boe, reduced cash operating costs/boe and improved capital costs (which all offer reduced interest/boe as a derivative). A finance case where less is truly more. Tourmaline already trumps its lean gas peers in size and is now moving to strive to be the best return on capital in the group too, with more Gundy and less other. We could not approve more.”
With files from staff and wires