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On the rise

Shares of Canadian Tire Corp. Ltd. (CTC.A-T) were higher on Thursday after raised its dividend by 25 per cent as it reported its first-quarter profit and revenue rose compared with a year ago.

The retailer said it will now pay a quarterly dividend of $1.625 per share, up from $1.30 per share.

Canadian Tire reported net income attributable to shareholders of $182.1-million or $3.03 per diluted share, up from $151.8-million or $2.47 per diluted share a year earlier.

Revenue for the quarter ended April 2 totalled $3.84-billion, up from $3.32-billion in the same quarter last year.

Comparable sales at its Canadian Tire retail business grew 4.5 per cent, while its Mark’s banner saw comparable sales gain 17.1 per cent. Comparable sales at its Sport Chek stores gained 10.2 per cent.

On a normalized basis, Canadian Tire said it earned $3.06 per diluted share, up from a normalized profit of $2.57 per diluted share a year ago.

In a research note, Desjardins Securities equity analyst Chris Li said: “Despite lapping strong year-ago same-store sales and revenue, we believe the strong results reflect CTC’s multi-category assortment and omnichannel customer, and data-centric positioning which has enabled it to gain market share. ... We believe the current valuation has largely priced in macro risks. Better macro visibility is needed for the shares to rerate.”

Crescent Point Energy Corp. (CPG-T) closed higher after it raised its quarterly dividend as it reported first-quarter net income of $1.18-billion, boosted by a reversal of a non-cash impairment charge related to the rise in energy prices.

The company said it will increase its quarterly dividend to 6.5 cents per share, up from 4.5 cents per share.

The increased payment to shareholders came as Crescent Point said it earned $2.03 per diluted share for the quarter ended March 31, up from a profit of $21.7-million or four cents per diluted share a year ago

Crescent Point said its adjusted earnings from operations amounted to 41 cents per diluted share for the quarter, up from 28 cents per diluted share a year earlier.

Oil and gas revenue for the quarter totalled $978.4-million, up from $547.5-million in the same quarter last year.

Average daily production was 132,788 barrels of oil equivalent per day, up from 119,384 boe/d in the same quarter last year, while the company’s average selling price was $91.43 per barrel of oil equivalent, up from $58.65 a year ago.

Rivian Automotive Inc. (RIVN-Q) on Wednesday after the bell reaffirmed its annual production forecast of 25,000 units, saying ongoing supply chain disruptions and material costs prevented the electric vehicle maker from reaching its original target of 50,000 vehicles.

The Irvine, California-based company’s shares rose on Thursday.

“We remain focused on ramping production throughout 2022. We believe that the supply chain constraints will continue to be the limiting factor of our production,” Rivian said in a letter to shareholders, adding that it would be able to double its annual output absent supply constraints.

Rivian had halved its 2022 forecast in March as it struggled to secure the chips needed to make its R1T pickup truck, R1S SUV and electric delivery van for Amazon.

Investors have been disappointed with the company’s progress, and Rivian shares came under growing pressure this week as the company’s post-IPO lockup period expired. Ford Motor Co sold eight million Rivian shares for US$124-million, a Tuesday filing showed.

At around US$18.5-billion, Rivian’s market valuation has plummeted since it went public in November. The company is now valued roughly in line with the US$17-billion it holds in cash and cash equivalents.

That made Rivian a potential acquisition target by Amazon, its second-largest shareholder, “or a traditional automaker looking for a bolt-on EV acquisition,” CFRA Research analyst Garrett Nelson said.

Rivian, which currently operates a single plant in Illinois, is planning to invest US$5-billion to build a new production plant in Georgia. A company spokeswoman last week said Rivian aimed to open that plant in late 2024, but Rivian on Wednesday said it was looking at a 2025 launch date.

Rivian said it had enough cash on hand to open the Georgia factory. That was a “big plus,” said Redburn analyst Charles Coldicott, adding that analysts had expected the company to raise additional capital in 2024.

Rivian is one of several EV startups facing a crowded field of competitors, including market leader Tesla Inc. Other large, incumbent automakers have pledged billions in investments on new technology and EV plants.

Rivian delivered 1,227 vehicles in the first quarter, up from 909 units in the previous quarter.

The company reported first-quarter revenue of US$95-million, below analysts’ estimates of US$130.5-million, according to Refinitiv data.

Its net loss widened to US$1.59-billion from US$414 million a year earlier.

On the decline

Manulife Financial Corp. (MFC-T) shares fell to their lowest level since January 2021 after its first-quarter earnings declined due to lower sales and new business in Asia as COVID-19 infections rose in some parts of the region.

Canada’s biggest life insurer could see further impact from the pandemic despite an ebb in cases and lifting of restrictions, executives said on Thursday.

“In Q1 of this year, we saw a really unprecedented resurgence of COVID in Hong Kong, but also in other markets in Asia,” Manulife Chief Executive Roy Gori said on an analyst call.

“It’s temporary in nature... but it’s not necessarily true that we’ll see an immediate bounceback in one quarter,” he said, adding that the company still believes the “Asia opportunity is undeniable.”

CIBC analysts said in a note that persistent growth challenges in Asia meant the company could miss analysts’ expectations for the fiscal year.

Manulife shares dropped to their lowest intraday level since January 2021.

Manulife on Wednesday reported a decrease in core earnings and missed analysts’ expectations, as a decline in sales and new business in Asia offset increases in Canada and the United States.

The company reiterated that it still aims to achieve half of core earnings from Asia by 2025.

Rival Sun Life Financial (SLF-T) also reported a decline in earnings, also driven by the resurgence of the pandemic in Hong Kong, as well as higher claims from the United States, although it beat expectations.

On Manulife, Scotia Capital analyst Meny Grauman said: “Coming into the quarter we highlighted that the shares’ year-to-date outperformance made this name vulnerable heading into what was expected to be a challenging quarter. Well the reality is that Manulife’s performance this quarter did come under pressure, but the silver lining is that there is nothing in these numbers that is terribly surprising or likely to particularly weigh on expectations.”

On Sun Life, Mr. Grauman said: “Sun Life reported a first quarter result that delivered largely as advertised .... The bottom line is that there is nothing in this result that should drive a massive upward revision in estimates, however a 14.0-per-cent core ROE [return on equity] despite some significant headwinds suggests to us that the recent underperformance of the shares is unjustified.”

Brookfield Asset Management Inc. (BAM.A-T) dropped after it said on Thursday it will separate and list 25 per cent of the stake in its asset management unit, months after the Toronto-based company said it was considering the move to open up growth options.

The company will initially hold a 75-per-cent stake in the new entity, with the rest distributed to its current shareholders by the year end, Brookfield said.

Both the parent company and the separated unit will trade on the New York Stock Exchange and the Toronto Stock Exchange, the company said.

In February, Brookfield Asset Management Chief Executive Officer Bruce Flatt wrote in a letter to shareholders the company was “asset-heavy” compared to most of its peers, and that dimmed its appeal to some.

The split could also potentially attract interest from investors who do not want exposure to Brookfield’s other units, such as the reinsurance business launched last year, Mr. Flatt wrote at the time.

Last year, Wells Fargo & Co also streamlined operations by selling its asset management arm to private equity firms GTCR LLC and Reverence Capital Partners for $2.1-billion

Quebecor Inc. (QBR.B-T) dipped as it declared its interest in buying cell phone service provider Freedom Mobile but says it could also push ahead with its own wireless offering outside its home province.

The Montreal-based media and telecommunications company is looking at the expansion of its wireless business “with increasing favour,” it said in comments accompanying first quarter results. It said it has two potential options: Acquire Shaw’s Freedom Mobile or launch its own telecom offering in provinces where it has bought the necessary wireless spectrum needed to start operations. Spectrum are the airwaves used to transmit wireless signals.

“We believe that these alternatives position us very favourably, as governmental and administrative authorities, including the Canadian Radio-television and Telecommunications Commission, pursue the public policy of establishing the conditions for true competition in wireless services in Canada,” Quebecor said in a statement. “The opportunities are many and the alternatives promising.”

Rogers (RCI-B-T) is attempting to buy Freedom-owner Shaw Communications Inc. (SJR-B-T) for $26-billion, and must sell its wireless division for the federal Competition Bureau and the government’s Department of Innovation, Science and Economic Development (ISED) to approve the takeover. Last week, the bureau made an application to block the Shaw deal on the grounds it would reduce competition in the wireless market, which it called an “essential service.”

Freedom is expected to fetch up to $4-billion and so far, there has been significant interest from suitors. A group including the $10-billion LiUNA Pension Fund of Central and Eastern Canada and Musqueam Capital Corp. have made an offer and presented it to federal government officials for approval, The Globe and Mail has reported.

- Nicolas Van Praet

See also: Quebecor a credible bidder for Shaw’s Freedom Mobile business, federal government source says

WSP Global Inc. (WSP-T) slid with the broader market as it boosted profits and revenue last quarter, beating expectations as it secured key project wins across three continents.

The Montreal-based engineering firm locked down contracts tied to Ontario’s GO Transit rail expansion, an offshore energy hub off the coast of Italy and a hospital redevelopment in Melbourne, Australia.

The new work helped push WSP’s backlog to $11 billion, growing it organically by nearly 16 per cent last quarter compared with a year earlier. Net earnings increased eight per cent and revenues leaped 29 per cent, the company said Thursday.

The rail contract, announced last month, will see WSP take on design and engineering services within a partnership composed of a half-dozen companies working toward “one of the largest regional transit projects in Canadian history,” WSP chief executive Alexandre L’Heureux told analysts on a conference call.

The agreement between the six partners and the Metrolinx regional transport agency and Infrastructure Ontario marks phase one of a multibillion-dollar plan to transform the GO rail network from a peak-period commuter service into an all-day one “with a subway like frequency” for the Greater Toronto and Hamilton Area, he said. It also involves acquiring an electric train fleet, electrifying 600 kilometres of track and building 200 kilometres of new track.

Despite the healthy quarter, WSP’s stock has tumbled 25 per cent since the start of the year.

“We’re not paying too much attention to what’s happening to the stock market at the moment,” L’Heureux said.

“We are being awarded a lot of great work both in the public and also in the private sector,” he stated, saying U.S. President Joe Biden’s US$1-trillion infrastructure plan holds promise for government-funded projects starting next year.

“Some peaks and valleys, obviously. But I have to say... if it’s not the strongest, it’s certainly a very good period for the company.”

The firm reported net earnings attributable to shareholders of $95 million or 81 cents per share in the quarter ended April 2 compared with $87.9 million or 77 cents per share in the same period last year.

Revenues rose to $2.71 billion from $2.10 billion a year earlier, beating the average analyst estimate by a third, according to financial data firm Refinitiv.

Adjusted net earnings climbed to $136.4 million or $1.16 per share in the first quarter from $94.2 million or 83 cents per share a year earlier, topping analyst estimates by six cents per share.

Walt Disney Co. (DIS-N) slid despite easing concerns on Wednesday about the future of streaming video by picking up 7.9 million new Disney+ customers, although the company warned supply chain disruptions and rising wages could pressure finances.

Wall Street had been expecting 5.3 million new Disney+ customers from January through March. Disney still has a long way to go to hit ambitious, multi-year targets, but its growth encouraged investors after Netflix Inc’s (NFLX-Q) losses.

The entertainment giant is working to offset inflationary pressures and challenges in the global supply chain, executives said on a call with analysts.

“Right now, it’s very difficult to accurately forecast the potential financial impact due to the fluidity of the situation but you can trust that we are fully aware of it and we’re working hard to mitigate any pressure on the margin,” said Chief Financial Officer Christine McCarthy.

Disney needs to average nearly 9.1 million new customers per quarter to reach the low end of its goal of adding 230 million to 260 million Disney+ subscribers by the end of September 2024. Chief Executive Bob Chapek reiterated that target on Wednesday.

The world’s largest entertainment company has staked its future on building a streaming TV business to rival Netflix, the company that first drew mass audiences to subscription video.

Netflix unnerved Wall Street last month when the company disclosed it lost subscribers in the first three months of 2022 and forecast more defections through June.

The Netflix results hit media stocks and prompted investors to re-evaluate their expectations for online video.

Total subscriptions for Disney+, launched in November 2019, reached 137.7 million, the company said Wednesday, with help from new releases including Marvel’s Moon Knight series and Pixar movie Turning Red.

“In spite of less-than-optimal results overall, because of the positive streaming numbers, Disney will do well,” said Shahid Khan, partner at Arthur D. Little, a technology and management consulting firm. “As households rationalize their streaming choices, given the inflation, Disney+ will become one of the top choices and will become a real threat to Netflix.”

Disney reported adjusted earnings per share of US$1.08, below analyst forecasts of US$1.19, according to IBES data from Refinitiv, impacted by an increase in the effective tax rate on foreign earnings.

Revenue came in at US$19.2-billion, below the US$20.03-billion consensus estimate. The company said revenue took a US$1-billion hit from early termination of a film and TV licensing agreement so that Disney could use the programming on its own streaming services.

Disney’s theme park business continued a strong rebound after extended pandemic-related closures and attendance restrictions.

Shares of Beyond Meat Inc. (BYND-Q) sat lower in volatile trading after opening below their initial public offering price for the first time on Thursday following the vegan meat maker’s bigger quarterly loss.

Shares tumbled as much as 22 per cent to a record low of US$20.50 and below the 2019 IPO price of US$25. Trading in the stock was halted multiple times in the first hour and turned positive in late morning trading.

Beyond Meat has seen its fortunes plummet in recent quarters as it battled increasing competition and surging inflation that has led Wall Street to fret over the possibility of the company needing more cash.

“They’ve got over $700 million in cash so they’re not going bankrupt. The stock is down 87% from its high and I think people are saying at this level maybe I give it a shot,” Thomas Hayes chairman Great Hill Capital in New York said.

“It’s got enough margin of safety.”

In the first quarter, cash used for operations surged to US$165-million from about US$31-million a year ago, as the plant-based meat pioneer diversified its product range.

“Beyond Meat’s cost structure may be out of whack, and cash may run out by the end of next year,” J.P. Morgan’s Ken Goldman said.

“We worry that management’s outlook is a bit out of balance with current realities.”

With files from staff and wires

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