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A roundup of some of the North American equities making moves in both directions today

On the rise

Rogers Communications Inc. (RCI.B-T) soared higher on Thursday after it beat estimates for third-quarter revenue on Thursday, as the telecom operator’s ad sales grew after NHL hockey and sporting events resumed.

See also: Rogers profit falls 14%; revenue tops forecasts

Revenue from the media segment, which includes television and radio broadcasting and digital media, rose 1 per cent to $489-million due to resumption of sports events.

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The company said it added 138,000 wireless postpaid net subscribers during the quarter, up 34 per cent, as stores reopened after coronavirus-led lockdowns.

However, the company’s revenue fell about 2 per cent to $3.67-billion, largely driven by a 9-per-cent decrease in wireless service revenue, as fewer people opted for its roaming services.

Analysts on average had expected revenue of $3.34-billion, according to IBES data from Refinitiv.

Excluding items, the company earned $1.08 per share, above analysts' estimates of 78 cents per share.

Rogers did not provide an updated financial outlook for 2020 due to uncertainties caused by the pandemic.

Sun Life Financial Inc. (SLF-T) was up after it signed a deal to acquire a majority stake in Crescent Capital Group LP in an agreement worth up to $450-million.

Under the deal, Sun Life will acquire a 51-per-cent stake in the alternative credit investment manager for an upfront payment of $370-million and up to an additional $80-million, based on the achievement of certain milestones.

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Sun Life also says it has committed to co-invest up to approximately $1-billion in Crescent’s investment strategies.

Crescent is focused on mezzanine debt, middle market direct lending in the U.S. and Europe, high-yield bonds and broadly syndicated loans.

The firm, which is based in Los Angeles, had approximately $38-billion in assets under management as of June 30.

It is expected to continue operating independently under its current leadership.

Precision Drilling Corp. (PD-T) gained after it said it lost $28.5-million in its latest quarter as revenue fell 56 per cent compared with a year ago.

The Calgary-based oilfield services company says the loss amounted to 10 cents per diluted share for the quarter ended Sept. 30.

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The result compared with a loss of $3.5-million or a penny per diluted share in the same quarter a year ago.

Revenue for its third quarter totalled $164.8-million, down from $375.6-million in the same quarter last year.

Precision says the drop in revenue came as customers cut drilling programs in response to the global economic slowdown.

In a research note, ATB Capital Markets analyst Waqar Syed said: “We view the slight EBITDA beat and guidance as slightly positive for the stock. The Company is showing strong execution on its strategic priorities and PD’s near-term outlook is mostly in-line with our expectations.”

Corus Entertainment Inc. (CJR.B-T) rose after it reported its fourth-quarter profit rose compared with a year ago, even as its revenue fell.

The company, which includes Global Television, says it earned $30.3-million in net income attributable to shareholders or 15 cents per diluted share for the quarter ended Aug. 31.

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That compared with a profit of $22.9-million or 11 cents per diluted share a year ago.

Revenue totalled $318.4-million, down from $377.5-million.

On an adjusted basis, Corus says it earned $33.2-million or 16 cents per share in the quarter, up from an adjusted profit of $27.9-million or 13 cents per share a year ago.

For its full financial year, Corus says it had a loss attributable to shareholders of $625.4-million or $2.98 per diluted share on $1.51-billion in revenue. That compared with a profit of $156.1-million or 74 cents per diluted share on $1.69-billion in revenue in the same period a year earlier.

North American Construction Group Inc. (NOA-T) soared after announcing it has won a “major” earthworks construction contract at a gold mining project in Northern Ontario.

The contract was awarded to a newly formed joint venture owned and operated equally by the Alberta-based company and Nuna Group of Companies. The award of this two-year project is valued at over $250- million.

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National Bank Financial analyst Maxim Sytchev said the contract is a "big step in revenue diversification.

In a research note, he added: “Prior to the announcement, we were forecasting $662-million for 2021 revenue; this contract would impute an 15-per-cent lift to the original estimate (although we always assumed the company to be winning new work; the contract, however, materially backstops our forward revenue expectations). In addition to the significant dollar-value, the contract also benefits the company’s ongoing effort to diversify its revenue base away from Fort McMurray.”

“Recall that management already has a target of having 40 per cent of EBIT outside of oil sands by 2022 (and in July’s conference call, the company was hopeful to make an announcement on this front – so timing has been accurate). While this year has indeed been unprecedented when it comes to revenue headwinds, we are still expecting the company to generate $154-million in EBITDA for 2020 (yes, with some CEWS help, but the company is retaining its highly technical workforce). This is vis-à-vis the backdrop of companies with any oil exposure crumbling under the weight of volatility. As some of the healthy gold pricing is translating into capex in the ground, we should also not forget iron ore, another commodity that has been doing extremely well this year. Over time, this could be another avenue of potential contracts growth. With a more diversified revenue mix, we are hoping that the market will stop treating NOA shares as a pure beta on oil pricing, but a holistic construction support player with a wide range of mine support capabilities.”

Shares of Tesla Inc. (TSLA-Q) jumped on Thursday as investors and the Street applauded their third-quarter results.

The electric car and solar panel maker said Wednesday that it made US$331-million, or 27 US cents per share, for its fifth-straight profitable quarter.

Excluding special items such as stock-based compensation, Tesla made 76 US cents per share, beating Wall Street estimates of 57 US cents. Revenue from July through September was US$8.77-billion, a record that passed analysts' expectations of US$6.3-billion, according to FactSet.

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But as in previous quarters, the company relied heavily on US$397-million it earned from selling electric vehicle credits to other automakers so they can meet government fuel economy and pollution regulations.

The earnings were driven by a 44-per-cent increase in global deliveries for the quarter, which came as U.S. auto sales overall fell 9.7 per cent from a year ago due to consumer fears about the economy hit hard by the pandemic.

See also: Thursday’s analyst upgrades and downgrades

U.S. railroad operator CSX Corp. (CSX-Q) rose after it reported a lower quarterly profit after cost controls failed to offset declining coal and merchandise volume.

The Jacksonville, Florida-based company, considered one of the most efficient U.S. railroads, had third-quarter net earnings of US$736-million, or 96 cents per share, down from US$856-million, or US$1.08 per share, a year earlier.

Revenue fell 11 per cent to US$2.65-billion.

Citi analyst Christian Wetherbee said: “Coming off CSX’s 3Q20 earnings conference call we are struck by how well the company did converting rebounding revenue into operating profit growth. Sequential incremental margins were 79 per cent, besting Norfolk Southern’s pre-announced 78-per-cent mark and Kansas City Southern’s very solid 73 per cent. This type of disciplined resource and cost control is likely to help the company’s narrative that it is reaching PSR maturity. In addition, the company’s volume growth outperformance is becoming noticeable again vs. its geographic peer. Collectively, the strong performance in 3Q, recovering volume and cleaner outlook for 2021 from an expense standpoint (remember 2020 had $200-million coal headwinds along with lower other revenue and land sales) suggest upside to consensus estimates and upside to shares.”

Coca-Cola Co. (KO-N) beat revenue and profit expectations on Thursday as strong “at-home” sales helped the world’s largest soda maker bounce back from a shattering second quarter, sending its shares up.

The beverage company, which makes about half of its revenue from sales in restaurants, theaters and other public venues, reported a slowdown in declines in “away-from-home” sales and said the last quarter had been its most challenging.

The company said sales of its trademark Coca-Cola and Coca-Cola Zero Sugar were now positive.

“While many challenges still lie ahead, our progress in the quarter gives me confidence we are on the right path,” Chief Executive Officer James Quincey said in a statement.

Organic sales, which strip out acquisition and currency impacts, fell 6 per cent for the three months ended Sept. 25, but improved from a 26-per-cent fall in the second quarter.

Net income attributable to Coca-Cola’s shareholders fell 33.01 per cent to US$1.74-billion.

On a per share basis, the company earned 55 US cents per share, 9 US cents above expectations, according to IBES data from Refinitiv.

Net revenue fell 9 per cent to US$8.7-billion, above the estimate of US$8.36-billion.

AT&T Inc. (T-N) rose in reaction to reporting the coronavirus pandemic had taken a heavy toll on its media business, but quarterly results were offset by stronger than expected gains in new phone subscribers lifted by offers for its HBO Max streaming service for free on certain phone plans.

That helped AT&T beat revenue expectations. Total revenue was US$42.3-billion during the third quarter ended Sept. 30, exceeding the average analyst expectation of US$41.59-billion, according to IBES data from Refinitiv.

The company added 645,000 net new phone subscribers during the quarter who pay a recurring monthly bill. Analysts had expected AT&T to lose a net 9,000 customers, according to research firm FactSet.

Adjusted earnings per share were 76 US cents, matching analyst expectations. The figure was down from US 94 cents in the same quarter last year.

AT&T said the pandemic eroded earnings per share by 21 US cents.

U.S. pipeline operator Kinder Morgan Inc. (KMI-N) gained ground after it reported a 10-per-cent drop in quarterly profit on Wednesday as a steep fall in energy demand due to the coronavirus crisis led to lower shipments of refined products and natural gas.

A pandemic-driven drop in energy demand has freed up some capacity at pipeline companies, forcing them to offer discounts to customers for moving crude, gas and refined products.

Kinder Morgan said earnings from its product pipelines, which move gasoline, jet fuel and diesel, fell 20 per cent in the reported quarter.

The company also forecast fourth-quarter volume for refined products to be off by about 10 per cent from a year earlier.

Market conditions are weighing on a number of planned expansion projects, Kinder Morgan said, adding that they were not needed at least in the near term.

Excluding items, Kinder Morgan earned 21 US cents per share, in line with Wall Street estimates, according to IBES data from Refinitiv.

Freeport McMoRan Inc. (FCX-N) rose after the Arizona-based miner reported a quarterly profit on Thursday, compared to a loss a year earlier, benefiting from higher gold prices as uncertainty fueled by the COVID-19 pandemic pushed investors toward safe-haven assets.

The average price that Freeport received for its gold surged nearly 28 per cent to US1,902 per ounce in the third quarter, with copper and gold sales nearly 7 per cent higher than the company’s July estimates.

Net income attributable to shareholders was US$329-million, or 22 US cents per share, in the quarter ended Sept. 30, compared to a net loss of US$207-million, or 15 US cents per share, a year earlier.

Excluding items, Freeport reported a profit of 29 US cents per share, beating analysts' average estimate of 21 US cents, according to IBES data from Refinitiv

Southwest Airlines Co. (LUV-N) increased as it reported on Thursday a loss of more than US$1-billion, its biggest ever, in the third quarter, while saying it would burn less cash in the months to come as leisure bookings show signs of recovery from this year’s coronavirus-driven collapse.

Southwest, which is blocking middles seats for social distancing through November, said it would resume selling all available seats for travel from Dec. 1, referencing recent medical research about the coronavirus that shows the risk of breathing COVID-19 particles on an airplane “is virtually non-existent, with the combination of air filtration and face covering requirements.”

On an adjusted basis, the company lost US$1.99 per share. Total operating revenue fell 68.2 per cent to US$1.79-billion.

Southwest ended the second quarter with liquidity of US$15.6-billion.

American Airlines Group Inc. (AAL-Q) was also higher after it reported a third straight quarterly loss on Thursday, hurt by a slump in travel globally due to the COVID-19 pandemic.

The company posted a net loss of US$2.40-billion, or US$4.71 per share, in the third quarter ended Sept. 30, compared with a profit of US$425-million, or 96 US cents per share, a year earlier.

American Airlines said it expects its cash burn rate to fall to about US$25-million to US$30-million a day in the fourth quarter from about US$44-million per day in the third quarter and US$58 -million per day in the second.

To halt the bleed entirely, it would need about 65 per cent to 70 per cent of the US$11-billion in revenue it reported in 2019. It drew in just US$3.19-billion of revenue in the third quarter, down 73 per cent from a year ago.

American also said it will tap US$7.5-billion in federal loans, more than initially forecast.

Chemical maker Dow Inc. (DOW-N) fluctuated between gains and losses in the wake of beating third-quarter profit expectations on Thursday, benefiting from cost cuts and a pick up in demand in several industries including consumer durables, construction and automotive.

The company had cut 6 per cent of its global workforce and sold non-core businesses to bolster cash reserves by nearly a billion dollars to cope with the weak demand for its chemicals due to the pandemic.

However, consumer spending on big-ticket items such as furniture, appliances and vehicles, key markets where Dow has significant exposure, has started to gain momentum.

While overall volume declined 1 per cent from the year-ago period, it rose 9 per cent from the previous quarter, helped by increasing demand across furniture and bedding, appliances, packaging, construction and automotive end markets, Dow said.

Excluding items, the company earned 50 US cents, higher than 33 US cents estimated by analysts.

Revenue came in at US$9.71-billion, also beating estimates of US$9.53-billion.

On the decline

Chipotle Mexican Grill Inc. (CMG-N), one of the best performers in the restaurant sector with a 60-per-cent rise in share price this year, fell in the wake of posting an 18.6-per-cent drop in quarterly profit, hurt by higher beef prices, delivery costs and coronavirus-related expenses.

Still, the burrito chain reported a three-fold jump in online sales, as consumers ordered more freshly prepared meals and favored to-go orders instead of dining inside restaurants.

Comparable sales rose 8.3 per cent, beating Wall Street expectations of a 7.59-per-cent rise, according to IBES data from Refinitiv.

Fast food restaurants - particularly pizza and Mexican restaurants - have seen sales increase amid the pandemic as customers craved comfort food, preferred the contactless nature of delivery, drive-thru and pick-up, and got tired of their own cooking at home.

Chipotle’s digital sales could exceed US$2.5-billion in 2020, more than double the amount in 2019, Chief Executive Officer Brian Niccol told analysts during a post-earnings conference call.

Net income fell 18.6 per cent to US$80.2-million for the third quarter. On an adjusted basis, the company earned US$3.76 per share, beating estimates of US$3.47.

Shares of McAfee Corp. (MCFE-Q) fell 7 per cent in their market debut on Thursday, marking a disappointing opening for the cyber security firm after it raised about US$620-million in its initial public offering.

The stock opened at $18.60 per share, compared with its IPO price of US$20 per share. At the debut price, the company was valued around $8 billion.

McAfee priced its IPO towards the lower end of its targeted range between US$19 and US$22 per share.

The offering marks a return to public markets for McAfee, which was bought by Intel Corp in 2011.

It was then turned into a joint venture with TPG Capital in a deal which valued the company at US$4.2-billion, including debt. Thoma Bravo took a minority stake in McAfee in 2017.

In the first half of 2020, McAfee’s net revenue was US$1.4-billion with a net income of US$31-million.

--

With files from staff and wires

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