A roundup of some of the North American equities making moves in both directions today
On the rise
Toronto-Dominion Bank (TD-T) gained on Thursday after it reported higher fourth-quarter profit excluding one-time items and raised its dividend by 13 per cent, driven by solid returns from retail banking and a large recovery from its reserves against loan losses.
TD raised its quarterly dividend to 89 cents per share after the federal banking regulator recently lifted pandemic-related restrictions. And the bank announced a buyback plan that allows it to repurchase 50 million shares, or about 2.7 per cent of the common stock outstanding.
TD’s core retail banking profits from operations in Canada and the U.S. rebounded from low levels a year ago, and edged higher when compared with the third quarter. Customers are starting to spend and borrow more and lending volumes have started to rise accordingly, while credit card balances increased for the second straight quarter as travel restrictions eased.
“Any economic recovery is never in a straight line. But what we saw in [the fourth quarter] is strong customer activity,” said Kelvin Tran, TD’s chief financial officer, in an interview.
For the fiscal fourth quarter that ended Oct. 31, TD earned $3.8-billion, or $2.04 per share, compared with $5.1-billion, or $2.80 per share, a year ago. Results from the fourth quarter a year earlier were inflated by a gain from the bank’s sale of its stake in TD Ameritrade to Charles Schwab Corp.
Adjusted to exclude certain items, including that gain, TD said it earned $2.09 per share. On average, analysts expected adjusted earnings per share of $1.96, according to Refinitiv.
- James Bradshaw
Shares of Descartes Systems Group Inc. (DSG-T) rose following better-than-expected third-quarter 2022 results.
After the bell on Wednesday, the Waterloo, Ont.-based tech firm reported revenue of US$109-million, up 24 per cent year-over-year and exceeding the projection of the Street (US$108-million). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 32 per cent to US$48.2-million, exceeding the company’s 10-15-per-cent long-term target and also topping the consensus estimate (US$46.8-million).
“Q4 baseline implies that double-stacked organic growth is likely to reach all-time highs next quarter,” said RBC Dominion Securities analyst Paul Treiber in a research note. “Although trade volumes are elevated at the moment, we believe that Descartes is also benefiting from stronger structural demand for logistics software, which is augmenting Descartes’ capital allocation model.”
Celestica Inc. (CLS-T) increased on the premarket announcement of gaining approval to launch a normal course issuer bid with the intent to repurchase for cancellation up to 8.987 million shares, or approximately 10 per cent of the public float.
The bid will be funded using existing cash resources and draws on its credit facility.
“The Company believes that the purchases are in the best interest of the Company and constitute a desirable use of its funds,” it said.
AutoCanada Inc. (ACQ-T) jumped a day after it announced it has completed the acquisition of 11 dealerships from the Autopoint Group with dealerships across Southwestern Ontario. The dealerships generate annual revenue of over $345 million, selling and servicing Honda, Acura, Nissan, Infiniti, Subaru, and Kia vehicles.
The company said the deal provides geographic diversification by more than doubling its Ontario footprint from seven to 18 dealerships.
“The acquisition adds significant size, scale and scope to AutoCanada’s existing platform in a growing market,” said Paul Antony, AutoCanada’s executive chairman in a release.
In a research note, Stifel analyst Maggie MacDougall said: “The change in our forecast causes our target to increase to $65.50 from $64.50. Recent market volatility aside, we have been perplexed with the steep sell off in ACQ shares following a solid Q3 result and against the backdrop of a still ongoing turnaround that has momentum, supply demand conditions that are supportive of the business, and a large fully funded M&A pipeline. The company still has material deal flow left in its pipeline, and we believe more acquisitive growth will come either in Q4 or early in the New Year. We do not model unannounced M&A in our forecast, and the stock is now trading at 7.1 times forward EBITDA which is the lowest multiple it has traded at since 2012. We think this is an early Christmas gift and recommend investors Buy ACQ.”
Goodfood Market Corp. (FOOD-T) turned positive after it announced the departure of Gregory Christopher, executive vice-president of operations, effective today, amid a review of its organizational structure.
The company said chief operating officer Neil Cuggy, will assume the role as the company “continues to focus investments into its rapidly growing on-demand grocery operations.”
The company said it has been looking to cut costs to drive margin improvement and “align our resources with the agility required to capture leading online grocery market share with our on-demand growth platform.”
The company said it started a review of its organizational structure “in light of the progressive completion and implementation of systems and improvement in processes coupled with aligning our workforce towards our future catalyst for growth, on-demand groceries, meal kits and ready-to-eat meals.”
It expects the initiatives to generate $10-million to $15-million of annualized cost savings.
Boeing Co. (BA-N) rose in the wake of China’s aviation regulator clearing its 737 Max on Thursday to return to flying with technical upgrades more than two years after the plane was grounded worldwide following two fatal crashes.
China is the last major market where the Boeing 737 Max was awaiting approval after the United States allowed flights to resume in December 2020 and European Union regulators gave permission in January. Brazil and Canada also have given approval.
Governments grounded the Boeing 737 Max after a total of 246 people were killed in the crashes of a Lion Air flight in Indonesia on Oct. 29, 2018, and an Ethiopian Airlines flight on March 10, 2019.
Investigators blamed a computer system that pushed the plane’s nose downward in flight and couldn’t be overridden by pilots.
Chinese pilots will need to complete new training before commercial flights can begin, the Civil Aviation Administration of China said on its website. It said Boeing Co. is required to install additional software and components.
“CAAC considers the corrective actions adequate to address this unsafe condition,” the agency said in an airworthiness directive.
China has the largest 737 Max fleet after the United States, with 97 aircraft operated by 13 carriers before the suspension, according to state media.
China is especially important to Boeing and its European rival, Airbus Industrie, because they are counting on its expanding travel market to propel sales growth. North American and European demand are forecast to be flat in coming decades.
In January, Boeing agreed to a US$2.5-billion settlement with the U.S. Justice Department to avoid criminal prosecution for misleading regulators about safety of the Max. Most of the money will go to airlines that bought the jets.
Chesapeake Energy Corp. (CHK-Q) increased as it authorized the repurchase of up to US$1-billion of common stock, becoming the latest shale producer to focus on shareholder returns, as energy prices recover from pandemic lows.
Producers are benefiting from a run-up in oil and natural gas prices, as the market rebounds from blistering losses during the pandemic.
Most publicly traded energy companies have vowed to focus on shareholder returns over increasing production.
“We estimate that total cash dividends to be paid to shareholders in 2022 will range from $800 million to $1 billion, based on our recent outlook and the current commodity price environment,” Chesapeake Chief Executive Officer Nick Dell’Osso said.
Oil majors Chevron Corp. (CVX-N) and Exxon Mobil Corp. (XOM-N) are among the other companies that have resumed share repurchases after halting them last year due to a pandemic-induced slump in oil prices.
Chesapeake was one of the worst-hit, filing for bankruptcy last year due to its ballooning debt.
On the decline
Canadian Imperial Bank of Commerce (CM-T) was lower in the wake of reporting higher fourth-quarter profit and raised its dividend by 10 per cent but earnings still fell short of analysts’ expectations as revenue levelled off and expenses climbed higher.
Canada’s fifth-largest bank raised its quarterly dividend to $1.61 per share and announced a share buyback plan that would allow it to repurchase up to 10 million shares, or 2.2 per cent of shares outstanding.
All four of CIBC’s major business units reported profits that rebounded from depressed levels in the fourth-quarter last year, when banks were building reserves against potential losses from the COVID pandemic. But each division’s earnings fell when compared with the third quarter this year.
For the quarter that ended Oct. 31, CIBC earned $1.44-billion, or $3.07 per share, compared with $1.02-billion, or $2.20 per share, in the same period last year.
Adjusted to exclude certain items, CIBC said it earned $3.37 per share, but analysts and predicted adjusted earnings per share of $3.53.
- James Bradshaw
Newmont Corp. (NGT-T) was lower after it forecast gold production of 6.2 million ounces for 2022, up from the 6 million ounces it expects to produce this year, highlighting output increases from the Boddington mine in Australia and Ahafo in Ghana.
Total gold production combined with other metals is expected to be 7.5 million gold equivalent ounces in 2022, the company said.
Gold prices have gained recently as investors seek safer assets amid market volatility caused by the Omicron coronavirus variant.
Newmont said it expects all-in sustaining cost (AISC) of US$1,050 per ounce in 2022, improving to between US$920 and US$1,020 per ounce longer term. AISC is a key industry metric used by gold miners to measure overall cost of producing gold.
The Denver-based company expects its full-year gold production to improve to between 6.2 million and 6.8 million ounces over a longer period.
A day after falling 7.1 per cent. Canadian winterwear producer Canada Goose Holdings Inc. (GOOS-T) slid further despite running into further controversy in China due to a dispute over its return policies, with a city consumer watchdog calling it into meetings and other groups accusing it of “bullying” customers.
The latest furore against the premium down jacket maker comes just three months after the winterwear brand was fined for false advertising and as Chinese regulators have become more active protecting consumer rights.
Canada Goose became a hot topic on Chinese social media in recent days over its handling of a case involving a customer who wanted a refund of her purchases amounting to 11,400 yuan ($1,790.17) after finding quality issues.
She said she was told by Canada Goose that all products sold at its retail stores in mainland China were strictly non-refundable, according to her account which went viral online.
Canada Goose declined to comment on the specific case to Reuters but said that customers were eligible to receive a refund within 14 days, based on Chinese law, if their purchase had issues with materials or craftsmanship - a stance that was also reported by Chinese media.
That, however, has failed to quell criticism of the brand.
“No brand has any privileges in front of consumers,” the government-backed China Consumer Association (CCA) said in an opinion piece posted on its website on Thursday morning.
“If you don’t do what you say, regard yourself as a big brand, behave arrogantly and in a superior way, adopt discriminatory policies, be condescending and bully customers, you will for sure lose the trust of consumers and be abandoned by the market,” the CCA said.
Apple Inc. (AAPL-Q) fell after Bloomberg News reported it has told its parts suppliers that demand for the iPhone 13 lineup has slowed, signaling that some consumers have decided against acquiring the hard-to-find item.
The company had cut production of iPhone 13 by as many as 10 million units, down from a target of 90 million, due to a global chip shortage, but now it has informed vendors that even those orders may not materialize, the report said.
Shares of iPhone component and semiconductor suppliers Qualcomm, Skyworks, Europe’s ASML and Infineon were also down.
The holiday season is Apple’s biggest quarter in terms of revenue and a test for consumers’ interest in the company’s latest iPhones and MacBooks.
Analysts had expected demand to remain steady shortly for new products, but they lowered shipping estimates as supply chain issues burdened phone makers, with many retail partners warning about product shortages ahead of the holiday shopping season.
Apple Chief Executive Officer Tim Cook warned in October that the impact of supply constraints, which cost the company US$6-billion in sales in the fourth quarter and was affecting most of the company’s products, will be worse during the holiday quarter even as demand for the new lineup was robust.
The global chip crunch, initially due to high demand for smartphones and personal gadgets during the coronavirus pandemic, has affected the auto industry and disrupted production at companies ranging from Apple to GM.
Nikkei reported last month that Apple had cut back production of iPad tablets to allocate more components to iPhone 13.
Jack Dorsey-led payments company Square Inc. (SQ-N) was lower after it said late Wednesday it was changing its name to Block Inc.
The San Francisco-based company said the name “Square” had become synonymous with the company’s seller business. It added there would be no organizational changes and its different business segments will continue to maintain their respective brands.
The move comes days after Mr. Dorsey stepped down from his role as chief executive officer at Twitter Inc.
The digital payments giant’s crypto arm Square Crypto will change its name to Spiral, the company said.
The new name would become effective on or about Dec. 10, Square said, but the “SQ” ticker symbol on the New York Stock Exchange would not change at this time.
Shares of Grab (GRAB-Q), Southeast Asia’s biggest ride-hailing and delivery firm, fell in their Nasdaq debut on Thursday following its record US$40-billion merger with a blank-cheque company.
The backdoor listing on Nasdaq marks the high point for the nine-year-old Singapore company that began as a ride-hailing app and now operates across 465 cities in eight countries, offering food deliveries, payments, insurance and investment products.
Grab’s shares rose as much as 21per cent minutes after the listing before retreating to trade lower.
“The price makes no difference to me. I’m going to celebrate tonight and get back to work tomorrow,” Chief Executive Anthony Tan told Reuters just after the shares started trading.
Grab kicked off the biggest U.S. listing by a Southeast Asian company with a bell-ringing event in Singapore, hosted by Nasdaq and Grab’s executives.
With files from Brenda Bouw, staff and wires