A roundup of some of the North American equities making moves in both directions today
On the rise
Loblaw Cos Ltd. (L-T) rose in the wake of beating analysts' estimates for quarterly revenue and profit on Thursday, boosted by online sales as stuck-at home consumers spend more on groceries during the COVID-19 pandemic.
Loblaw, which sells everything from beauty products to mobile connections, said it would invest more to expand the pick-up and delivery operation while aiming to reduce costs amid the coronavirus crisis.
The company’s online sales more than doubled in the third quarter.
Net earnings attributable to its shareholders rose to $345-million, or 96 cents per share, in the quarter ended Oct. 3, from $334-million, or 90 cents per share, a year earlier.
Excluding one-time items, Loblaw earned $1.30 per share, beating the average analyst estimate of $1.26 per share, according to IBES data from Refinitiv.
Loblaw, a subsidiary of the biggest Canadian retail group George Weston, posted revenue of $15.67-billion, a 6.9-per-cent rise from a year earlier and above analysts' estimate of $15.61-billion.
Calfrac Well Services Ltd. (CFW-T) increased after it cut its capital budget as it reported a $50-million loss in its latest quarter.
The company says its capital budget for this year has been reduced to $40-million from $55-million.
Calfrac’s loss for the quarter amounted to 34 cents per diluted share compared with a loss of $29.4-million or 20 cents per diluted share in the same quarter last year.
Revenue for the three-month period ended Sept. 30 totalled $127.8-million, down from $399.2-million a year earlier.
Calfrac received court approval last month for a recapitalization plan that will see holders of the company’s senior unsecured notes swap the debt for shares.
It says an appeal launched by Wilks Brothers LLC, which opposed the recapitalization plan and offered an alternative takeover offer, is expected to have a hearing at the Alberta Court of Appeal on Nov. 25.
ATB Capital Markets analyst Waqar Syed: “Third quarter operational performance was good with results slightly below ATBe but higher than consensus, while guidance was slightly better than expected. CFW also received Court approval of the recapitalization transaction and we will look to November 25th as the next key date. However, our concern remains the significant cash outflow during the quarter. The Company’s accounts receivables built during the quarter, and we would like to ask the Company if they could be a source of cash in the coming quarter.”
Stelco Holdings Inc. (STLC-T) rose after saying sales fell this summer after it shipped less steel at lower prices as it focused on an upgrade project.
The Hamilton, Ont.-based company says it had revenue of $237-million in the third quarter, down 49 per cent from its revenue of $464-million during the same period last year.
The steelmaker says it did not turn a profit in the three months that ended Sept. 30, instead reporting a loss of $88-million, or 99 cents per diluted share.
Stelco says steel prices fell to $683 per net ton in the third quarter, down from $688 per net ton last year, and shipping volumes fell to 334,000 net tons from 654,000 net tons last year.
Chief executive Alan Kestenbaum says that shipments fell over the summer as the company upgraded its blast furnace, a project that will lower costs and ramp up output going forward.
Mr. Kestenbaum says that the lower third-quarter shipments were timed for a period of low steel prices, which have since risen 50 per cent.
Endeavour Mining Corp. (EDV-T) increased after it declared its first annual dividend, saying it will pay out US$60-million, or 37 US cents per share, to investors after it reported higher third-quarter production.
The West Africa-focused gold miner also extended the mine life and production outlook of its two core mines, Ity in Ivory Coast and Houndé in Burkina Faso, in updated mine plans.
Endeavour’s third-quarter production jumped 64 per cent from the previous quarter to 244,000 ounces of gold.
“We’ve worked hard and invested heavily in recent years to build the platform we have today,” said Endeavour CEO Sébastien de Montessus.
“I really believe this work is now paying off and we are looking good for the end of the year and into the future.”
Mr. De Montessus said the Toronto-listed company was weighing the merits of London versus New York for a secondary listing, which he aimed to announce in year-end results. The planned listing plan, initially unveiled in August, is targeted for the second quarter of next year.
De Montessus also said he would consider a share buyback “if and only if” the share price continues to underperform.
Endeavour on Tuesday said it was in talks to combine with smaller miner Teranga Gold.
The Montreal-based company reported revenue of $323-million, up 10 per cent year-over-year due to “increased demand in products with significant e-commerce end market exposure including water-activated tape and protective packaging.”
Vancouver-based Entheon Biomedical Corp. (ENBI-CN), a biotechnology research and development company focused on psychedelic therapeutic products for the treatment of addiction and substance use disorders, jumped on its first day of trading on the Canadian Securities Exchange.
“We are thrilled by the opportunity that listing on the CSE presents. Addiction is a massive societal issue that can no longer be ignored. We are confident that our mission of developing safe and effective psychedelic treatments for those suffering from life-altering addictions will resonate with investors, and they will see not only the value and opportunity, but also the possibility of positively impacting society,” said Entheon CEO Timothy Ko in a release.
On the decline
The company says it plans to pay a special dividend in the form of a fraction of a share of BAM Reinsurance for a given number of class A shares of Brookfield.
It says it will aim to replicate the structure used to create Brookfield Renewable Corp. and Brookfield Infrastructure Corp. BAM Reinsurance will be a paired share to Brookfield Asset Management.
Brookfield says BAM Reinsurance will allow the company to grow its reinsurance business in the most efficient fashion, and provide flexibility to Brookfield’s shareholders.
The announcement came as Brookfield reported net income attributable to shareholders of US$172-million or 10 US cents per share for the quarter ended Sept. 30, compared with a profit of US$947-million or 61 US cents per share a year ago.
Funds from operations, a key measure for Brookfield, totalled US$1.04-billion or 65 US cents per share for the quarter, up from US$826-million or 54 US cents per share in the same quarter last year.
Auto parts maker Martinrea International Inc. (MRE-T) erased early gains and fell after saying it hopes to benefit from recent Canadian investments announced by Detroit-based U.S. automakers as it recovers from the COVID-19 pandemic.
Martinrea says it has so far booked $45-million in new business making propulsion systems for Fiat Chrysler and General Motors, and $10 million for electric vehicle platforms with General Motors.
The Vaughan, Ont.-based company says it had third-quarter sales of $971-million, down from $974.4-million in the third quarter of 2019.
Net income for the quarter was $45.6-million, or 57 cents per diluted share, compared with $46.7-million, or 56 cents per diluted share, in summer 2019.
Analysts polled by Refinitiv expected revenue of $986.9 million and net income of $38.3-million, or 47 cents per share.
The company’s board says it declared a quarterly cash dividend of five cents per share, and executives say that after layoffs stemming from the COVID-19 pandemic, they are hopeful that the auto business has turned a corner.
“It’s been quite a year so far, with the (second-quarter) COVID-19 shutdowns, to surging volumes in North America that met some of the highest volumes we’ve ever seen,” said chief executive Pat D’Eramo in a conference call with analysts.
“Demand is expected to remain strong for the remainder of the year, and the restart has gone as smoothly as we could have expected.”
Mr. D’Eramo estimated that the nearly $5 billion-worth of investments announced this fall in Unifor’s collective bargaining with Ford, General Motors and Fiat Chrysler was “probably the highest level of investments announced in our industry in Canada in over a decade.”
Manulife Financial Corp. (MFC-T) dipped after it said third-quarter core profit declined less than analysts had expected, helped by earnings growth in Asia and asset management, but it warned the COVID-19 pandemic posed risks.
Manulife reported underlying profit, excluding one-time charges, of $1.45-billion, or 73 cents a share, in the three months through September, from $1.53-billion, or 76 cents, a year earlier. Analysts had expected 70 cents.
Net income attributed to shareholders rose to $2.1-billion from $723-million a year earlier as the company posted gains from investment-related experience versus losses in the prior period.
Credit Suisse analyst Mike Rizvanovic said: “A decent Q3 overall relative to our expectations but less impressive than what we saw from the company’s peers this quarter with MFC the only lifeco to report lower core EPS both quarter-over-quarter and versus the prior year. We continue to have concerns on the ALDA [alternative long-duration assets] portfolio as we question the sustainability of management’s 9.3-per-cent annual return assumption in a low-rate environment, a change which could result in a material charge.”
Toymaker Spin Master Corp. (TOY-T) dropped in the wake of saying its revenue grew 4.3 per cent in its latest quarter as growing interest in DC-licensed products and Kinetic Sand offset fading sales of Hatchimals and some Paw Patrol toys.
The Toronto-based company says revenue for the three months ended Sept. 30 was US$571.6-million, up from US$548.1-million in the third quarter of 2019.
The toymaker says its third-quarter net income was US$86.8-million, or 83 US cents per diluted share, down from US$92.2-million, or 89 US cents per share a year earlier.
Analysts polled by Refinitiv expected Spin Master to report revenue of US$532.1-million and net income of US$79.75-million.
Co-chief executive Ronnen Harary says the company’s sales growth puts the company in a strong position for the upcoming holiday shopping season, after the company launched a new streaming show called Mighty Express this fall, as well as its Toca Boca brand digital games.
The results come after Spin Master announced a $50-million deal to buy the London-based maker of the Rubik’s Cube.
Superior Plus Corp. (SPB-T) fell after reporting its third-quarter results after the bell on Thursday and the US$6.1-million acquisition of Petro Home Services, a North Carolina-based retail propane distribution company.
ATB Capital Markets analyst Nate Heywood said: “Overall, we view the update as modestly positive as the quarter was supported by the Canadian Propane Distribution segment and given the continued deployment of the tuck-in acquisition growth strategy. Despite weak volumes, the Canadian segment outperformed expectations as SG&A costs were materially lower (19 per cent) due to the Canadian Emergency Wage Subsidy (CEWS). Guidance remains unchanged with the update and with five acquisition announced YTD, we remain optimistic of further acquisitions following the proceeds from the Brookfield Asset Management (BAM-N; not rated) investment in the quarter. Despite 2020 headwinds, the stock has performed well year-to-date (0.1 per cent) and continues to be attractively valued in comparison to the broader energy infrastructure space.”
Southwest Airlines Co. (LUV-N) was down after it said on Thursday an improvement in revenue seen in the past few months was losing steam in recent weeks amid surging COVID-19 cases in the United States, sending the U.S. budget carrier’s shares down.
“While the company expected the election to impact trends, it is unclear whether the softness in booking trends is also a direct result of the recent rise in COVID-19 cases,” Southwest said.
“As such, the company remains cautious in this uncertain revenue environment.”
Southwest said it continues to expect its November operating revenue to be between 60 per cent and 65 per cent compared to a year earlier, and forecast December operating revenue to drop to that range as well.
The company said its October operating revenue fell 65 per cent, compared to its expectations of a 65-per-cent to 70-per-cent drop.
Southwest estimates its January 2021 capacity to decrease in the range of 35 to 40 per cent, year-over-year, compared to an expected 40-per-cent fall in the current quarter.
Up to Wednesday’s close the company’s stock had fallen about 20 per cent this year
Altria Group Inc. (MO-N) declined after it said on Thursday it would convert its non-voting shares in Juul Labs Inc to voting shares, days after the tobacco giant took another billion-dollar hit to its 35-per-cent stake in the e-cigarette maker.
The company said it does not intend to exercise its additional governance rights obtained upon conversion, including the right to elect directors to Juul’s board, pending the outcome of a U.S. Federal Trade Commission (FTC) litigation.
Altria also does not intend to vote its Juul shares other than as a passive investor during the lawsuit.
The FTC in April filed a complaint aimed at forcing Altria to sell its investment in Juul, citing competition concerns.
The Marlboro cigarette maker invested US$12.8-billion in late-2018 for a minority stake in Juul through non-voting shares, with their conversion to voting shares linked to antitrust clearance.
Altria last month took a US$2.6-billion hit to the investment, reducing the value of the stake to US$1.6-billion.
Shares of Altria are down 20 per cent this year.
With files from staff and wires