A roundup of some of the North American equities making moves in both directions today
On the rise
The telecommunications and media company says it earned a profit attributable to shareholders of $178.5-million or 70 cents per share for the quarter ended Sept. 30. That compared with a profit attributable to shareholders of $187.1-million or 80 cents per share in the same quarter last year.
Revenue for the quarter totalled $1.07-billion, up from $1.05-billion a year ago.
Desjardins Securities analyst Maher Yaghi said: “QBR’s 3Q19 results were mostly in line to slightly above expectations on the financial front, removing the impact of one-time items. Subscriber numbers were strong in wireless as the company’s offers remained competitive amid the incumbents’ launch of unlimited plans. Wireline subscribers were on the weaker side of the spectrum. Overall, we continue to have a positive view of the company’s operations; however, given current valuations we see the stock as fairly valued.”
Manulife Financial Corp. (MFC-T) and Sun Life Financial (SLF-T) rose 1.2 per cent and 0.5 per cent, respectively, after reporting strong profits for the third quarter, which beat analyst expectations.
On Wednesday evening, Sun Life reported “underlying earnings” of $1.37 a share, far exceeding expectations of $1.27. This was up from $1.20 a year ago.
In addition, Sun Life also hiked its annual dividend by 5 per cent to 55 cents.
Manulife’s results, which were also released Wednesday evening, included “core earnings” of 76 cents a share, up a penny from the prior-year period and 3 cents above the average of analysts’ profit forecasts for the company.
Stella Jones Inc. (SJ-T) increased 7.9 per cent after releasing quarterly results before the bell that exceeded expectations on the Street.
Desjardins Securities analyst Benoit Poirier said: “We expect the stock to react positively as we believe the decent results, favourable outlook for 2019 and 2020, and robust FCF generation should reassure investors about SJ’s fundamentals. We would be buyers of the stock this morning as we believe recent stock performance hinted at a challenging quarter (stock is down 5 per cent since October 1 vs 1 per cent for the S&P/TSX).”
Telus Corp. (T-T) increased 4.2 per cent after it reported a slight increase in turnover among its mobile phone customers during the third quarter, as competition heated up in Canada’s wireless market.
Following the lead of its rival Rogers Communications Inc., Vancouver-based Telus introduced new wireless plans this summer that don’t charge customers additional fees for going over monthly data limits. Instead, the new wireless plans throttle download speeds after customers exceed their data limits.
Telus reported that it added 193,000 new wireless customers during the quarter, including 82,000 connected devices and 111,000 mobile phone customers. That’s 10,000 lower than the number of new mobile phone customers the company added in the third quarter of last year, as higher gross additions were offset by higher mobile phone churn.
- Alexandra Posadzki
Canadian Natural Resources Ltd. (CNQ-T) jumped 8.3 per cent in the wake of posting quarterly profit above analysts’ estimates on Thursday, as the country’s largest oil producer benefited from higher production.
The Calgary-based company said total production jumped 11 per cent to 1.18 million barrels of oil equivalent per day in the third quarter ended Sept. 30.
The company’s adjusted earnings was $1.23-billion, compared with $1.35-billion a year earlier.
Adjusting for certain items, the company earned $1.04 per share, beating analysts’ average estimates of 77 cents, according to IBES data from Refinitiv.
Raymond James analyst Chris Cox said: “Overall, a solid quarter across the board for CNQ, with the company flexing the strength of its diversified asset base to optimize results under the veil of curtailment, despite planned turnaround activity at Horizon. Solid cost performance should provide investors added comfort in the free cash flow generating ability of the company, with the company’s balanced free cash flow allocation approach on display during the quarter.”
Just Energy Group Inc. (JE-T) rose 15.6 per cent after it reported sales of $768.4-million in its second quarter of fiscal 2020, down 4 per cent from a year ago.
The company said its funds from continuing operations of $26-million increased from $25-million a year ago. Profit came in at 45 cents per share versus a loss of 38 cents a year ago.
Stantec Inc. (STN-T) increased 15.7 per cent after reporting better-than-anticipated quarterly results.
After the bell on Wednesday, the Edmonton-based engineering and construction firm reported revenue and earnings per share of $952.6-million and 59 cents, exceeding the Street’s expectation of $920.8-million and 55 cents.
Laurentian Bank Securities analyst Nauman Satti said: “Although we were pleasantly surprised by the Q3 results, especially from the strong organic growth in the U.S. operations, the quarter benefitted from a favorable project mix which can fluctuate from quarter to quarter. Furthermore, management outlook commentary has suggested a review of its long term average net revenue growth target of 15 per cent under the 2020 strategic plan, something we were anticipating as the law of large numbers was catching up. In our view, the cost saving initiatives announced in Q2 ($40/45-million annually) should remain vital in achieving the full-year target as Q4 is a seasonally weak quarter, compared to Q3.”
Ralph Lauren Corp. (RL-N) was up 14.6 per cent after it beat quarterly profit estimates on Thursday, driven by tighter control on expenses and strong demand for its Polo shirts and tweed jackets in China and Europe.
With slowing sales growth in North America, Ralph Lauren has been sending more of its products to international markets, especially China, where recent results from other high-end fashion companies show domestic demand for luxury products is strong despite a slowing economy.
The company has also been cutting costs by shipping more products by sea instead of air freight and by renegotiating vendor contracts for cheaper prices.
The company’s adjusted net income rose 6.5 per cent to US$198-million, or US$2.55 per share, in the quarter ended Sept. 28.
Analysts had expected a profit US$2.39 per share, according to IBES data from Refinitiv.
Retailer Canadian Tire Corp Ltd (CTC-A-T) rose 4.5 per cent despite missing third-quarter profit estimates on Thursday, hurt by higher e-commerce-related transportation costs and a drop in retail sales.
Competition from U.S. e-commerce giants Walmart and Amazon.com has hurt Canadian Tire’s brick-and-mortar sales and forced the 97-year-old company to invest heavily in its online business and provide faster delivery.
However, higher freight costs related to its SportsChek e-commerce business hurt net income, which fell to $227.7-million, or $3.20 per share in the third quarter ended Sept. 28, from $231.3-million, or $3.15 per share, a year earlier.
Revenue at the company’s retail segment fell marginally to US$3.3 billion, while analysts on average were expecting it to be US$3.43 billion, according to IBES data from Refinitiv.
Excluding items, Canadian Tire earned $3.46 per share, missing estimates of $3.47.
On the decline
RBC Dominion Securities analyst Stephen Walker said: “There may be a slight negative reaction to Kinross’ Q3/19 release given the slower than expected ramp up of the Nevada expansion projects in Q3, however their production is expected to improve in Q4. Tasiast continues to perform well and 2019 guidance was reiterated.”
Hydro One Ltd. (H-T) slipped 1.3 per cent after reporting that its third-quarter profit rose compared with a year ago, helped by lower costs, partially offset by lower revenue due to less favourable weather.
The Ontario power utility says it earned $241-million or 40 cents per diluted share for the quarter ended Sept. 30.
That compared with a profit of $194-million or 32 cents per diluted share a year ago.
Revenue totaled $1.59-billion, down from nearly $1.61-billion.|
Industrial Alliance Securities analyst Jeremy Rosenfield said: “t. We continue to view Hydro One as a fundamentally defensive investment, underpinned by (1) stable earnings and cash flows from its regulated utility businesses located in Ontario, (2) healthy organic rate base and earnings growth (4-6 per cent per year through 2023), and (3) an attractive dividend (4-per-cent yield, 70-80-per-cent target payout). We continue to see the stock as fairly valued and range bound over the near term during the ongoing leadership transition.”
Canopy Growth Corp. (WEED-T) slipped 1.9 per cent after revealing it will join forces with Toronto-born rap star Drake to launch a fully-licenced joint venture in the city to produce and distribute cannabis.
Under the deal, the multi-Grammy award winner will take a 60 per cent stake in a subsidiary of stock-market listed Canopy Growth, which produces cannabis in nearby Scarborough, Ontario.
Maple Leaf Foods Inc. (MFI-T) was down 0.2 per cent after announcing the company will slash its greenhouse gas emissions by nearly a third over the next decade and will offset what it can’t eliminate, while leaning on its suppliers to take action as well.
Quebec-based gold miner Semafo Inc. (SMF-T) was down 4.9 per cent after announcing it is halting operations at its Boungou gold mine in eastern Burkina Faso, a day after insurgents ambushed a convoy carrying its employees to the mine site and killed dozens in one of the worst terrorist attacks in the country’s history.
Expedia Group Inc. (EXPE-Q) dropped over 27.4 per cent as the online travel booking company missed quarterly profit estimates.
RBC Dominion Securities analyst Mark Mahaney said: “We are less constructive. We view softness in ADRs as temporary and remain impressed with EXPE’s highly consistent Demand trends – 12% average Room Nights and ex-FX Bookings growth over past 10 qtrs. It remains unclear to us how easily solvable the SEO headwinds are given the centrality of Google to OTA search volumes, and the declining relevance of Meta-Search makes our outlook on Trivago less certain. The AA opportunity remains attractive for EXPE but competition from BKNG & Airbnb and the Vrbo rebrand make execution increasingly more important/complicated. Current valuation, however, at 7x ’20E EBITDA strikes us as largely capturing these risks.”
Roku Inc. (ROKU-Q) plunged 16.1 per cent after posting a wider net loss in the third quarter, as it spent more to attract subscribers to its video streaming platform.
The San Jose, California, company’s net loss widened to US$25.2-million, or 22 US cents per share, in the third quarter ending Sept. 30, from US$9.5-million, or 9 US cents per share, a year earlier.
The loss was not as bad as the Street had expected, however. Analysts had forecast a loss of 28 US cents per share, according to Refinitiv estimates.
Total operating expenses for the quarter rose about 60 per cent to US$145-million from a year ago.
“Roku had strong earnings, but they are spending aggressively and not letting much profit flow through,” said Chaim Siegel, an analyst with Elazar Advisors.
With files from staff and wires