A roundup of some of the North American equities making moves in both directions
On the rise
Canadian Imperial Bank of Commerce (CM-T) finished narrowly higher in the wake of reporting higher first-quarter profit helped by lively capital markets and strong performance from its U.S. operations.
As with four other major banks that reported earnings earlier this week, CIBC’s results also received a significant boost from a sharp drop in provisions for credit losses, which are the funds banks set aside to cover loans that may default. CIBC’s provisions fell 44 per cent year over year, to $147-million.
For its fiscal first quarter, which ended Jan. 31, CIBC reported profit of $1.63-billion, or $3.55 per share, compared with $1.21-billion, or $2.63 per share in the same period a year earlier.
After adjusting for special items, CIBC said it earned $3.58 per share, well above analysts’ consensus estimate of $2.81 per share, according to Refinitiv. All five major banks that have reported fiscal first-quarter results so far have beaten expectations by a wide margin.
CIBC’s quarterly profit rose 34 per cent in part because it compares favourably to the first quarter of 2020, when CIBC recorded a $339-million restructuring charge. After adjusting for special items, CIBC’s quarterly profit increased 11 per cent.
- James Bradshaw
Loblaw Companies Ltd. (L-T) was higher with the expectation grocery sales will remain high in the first half of 2021, as Canadians continue to cook for themselves at home during the pandemic, and restrictions on businesses such as restaurants continue in many parts of the country.
The Toronto-based retailer released its fourth-quarter and annual results on Thursday, painting a picture of a year in which a grocery sector accustomed to slow and steady growth suddenly saw demand skyrocket. In 2020, Canada’s largest grocers also faced pressure to keep up with shopping habits shifting online, and endured criticism over whether they were paying front-line workers enough while they faced risks of infection on the job.
For the fiscal year ended Jan. 2, 2021, Loblaw reported $52.7-billion in revenue, compared to $48-billion in the prior year. The latest fiscal year included an extra week; on a comparable 52-week basis, revenue rose by 7.9 per cent (or 9.8 per cent for the full 53 weeks).
On an adjusted basis, Loblaw says it earned $1.26 per diluted share for its most recent quarter, up from an adjusted profit of $1.09 per diluted share a year earlier.
Analysts on average had expected an adjusted profit of $1.25 per share, according to financial data firm Refinitiv.
The company, which owns grocery stores including Loblaws, No Frills, Real Canadian Superstore and Provigo, reported that same-store sales at its supermarkets grew by 8.6 per cent in the year, a significant jump for an industry in which growth rates of 1 to 3 per cent are more common. Same-store sales, an important metric in retail, compares sales growth over a year not including the impact of store openings or closures. The Shoppers Drug Mart chain had same-store sales growth of 4.9 per cent in the year.
“In stores and online, our network met the challenge of outsized sales growth, keeping Canadians fed and well,” Loblaw executive chairman Galen Weston said in a statement.
- Susan Krashinsky Robertson
The food processing company says the profit amounted to 20 cents per diluted share for the quarter ended Dec. 31, up from 14 cents per share a year earlier.
Sales for the quarter totalled $1.13-billion, up from $1.02-billion in the fourth quarter of 2019, as both its meat protein and plant protein groups saw gains.
Meat protein group sales rose 11.3 per cent, while plant protein sales rose 5.5 per cent.
On an adjusted basis, Maple Leaf says it earned 30 cents per share, up from an adjusted profit of 12 cents per share a year earlier.
Analysts on average had expected an adjusted profit of 21 cents per share and $1.07-billion in sales, according to financial data firm Refinitiv.
Quebecor Inc. (QBR.B-T) saw gains after it raised its dividend as it reported its fourth-quarter profit rose compared with a year ago.
The company says it will now pay a quarterly dividend of 27.5 cents per share, up from 20 cents.
The increased payment to shareholders came as Quebecor says it earned net income attributable to shareholders of $159.8-million or 64 cents per diluted share for the quarter ended Dec. 31.
The result compared with a profit of $145.1-million or 57 cents per diluted share a year earlier.
Revenue for the quarter rose to $1.15-billion from $1.14-billion in the fourth quarter of 2019.
The overall increase came as telecommunications revenue rose, but the company’s media and sports and entertainment divisions saw revenue decline.
Gildan Activewear Inc. (GIL-T) soared with the premarket release of better-than-anticipated results.
The Montreal-based clothing manufacturer reported adjusted earnings per share of 45 US cents, topping the Street’s projection of 22 US cents.
It also announced it’s expecting to generate positive free cash flow in 2021 and expects to resume investments with projected capital expenditures running in the range of 4 per cent of sales.
Moderna Inc. (MRNA-Q) was up after it said on Thursday it expects COVID-19 vaccine sales of US$18.4-billion this year, above the US$15-billion in sales forecast by Pfizer Inc. (PFE-N) for the only other vaccine authorized for emergency use in the United States so far.
Both vaccines, developed using a technology based on messenger RNA (mRNA), are being distributed at an unprecedented speed as cases mount in the United States, with deaths from COVID-19 surpassing the dire milestone of 500,000.
Moderna has been aiming to ramp up production of the vaccine, its first and only revenue-generating product.
It now aims to produce at least 700 million doses this year and expects to raise production to as much as 1 billion doses by improving its manufacturing process..
“2020 demonstrated the power of harnessing mRNA to make medicines,” Chief Executive Officer Stéphane Bancel said in a statement.
Twitter Inc. (TWTR-N) soared after announcing it will launch new features and products faster to catch up with rivals in a plan to double annual revenue and reach a least 315 million users in 2023.
“We know we’ve been slow,” Chief Executive Jack Dorsey said in an investor day presentation. “When you compare us with our peers, it’s been especially stark.”
The social media network estimated annual revenue of at least US$7.5-billion by the end of 2023.
Twitter shares reached an all-time high of US$80.75 during the trading session.
Twitter said it was exploring new money-making features, including tipping and paid subscriptions to “super follow” some accounts. The second feature, which lets users charge their followers for access to additional content, will launch this year, a spokesman said.
The site, typically used to broadcast short messages to a wide audience, is also working on building more ways for people to have conversations, it said.
This includes hosting live audio discussions using its ‘Spaces’ feature, which is being tested with about 1,000 users, and letting people share longer-form content using Revue, a newsletter publishing service Twitter acquired last month.
On the decline
Provisions for credit losses - the funds banks earmark to cover loans that may go bad - fell 66 per cent to $313-million in the quarter. Although the bank added more provisions for loans that are past due, it also recovered $153-million from previous reserves that had been set aside to cover potential defaults on loans that are still current in its U.S. consumer lending portfolio.
In the three months that ended Jan. 31, TD earned $3.28-billion, or $1.77 per share, compared with $3-billion, or $1.61 per share, a year earlier.
Adjusted for certain items, TD said it earned $1.83 per share, while analysts predicted adjusted earnings per share of $1.51, according to Refinitiv.
All six of Canada’s largest banks exceeded expectations by wide margins, as falling provisions for credit losses and surging returns from capital markets helped push profits back above prepandemic levels.
- James Bradshaw
Adjusted profits for the three months ended Dec. 31 were $81.1-million or 71 cents per share, up from $55.3-million or 52 cents per share in the fourth quarter of 2019.
Net revenues dropped 4.1 per cent to $1.69-billion, and organic net revenues decreased 5.9 per cent.
The Montreal-based engineering firm was expected to post 83 cents per share in adjusted profits on $1.74 billion of revenues, according to financial data firm Refinitiv.
For the full-year, it earned $276-million or $2.50 per diluted share on $6.86 billion of revenues, compared with $286.5 million or $2.71-per share on $6.89-billion of revenues in 2019.
Adjusted profits came in at $3.08 per share, five cents per share below analyst forecasts but up from $2.91 a year earlier.
Raymond James analyst Frederic Bastien said: “We maintain our constructive stance on WSP Global after the engineering consultancy closed out a highly disruptive year with broadly in-line 4Q20 results. “With some big contract awards recently secured, three new tuck-in acquisitions under its belt, and a transformative deal in the environmental sector set to close imminently, we expect continued outperformance from the company in 2021.”
Tesla Inc. (TSLA-Q) slipped after Bloomberg reported it has told workers it will temporarily halt some production at its car assembly plant in California.
Workers on a Model 3 production line in Fremont were told their line would be down from Feb. 22 until March 7, according to the report.
The report did not clarify the reason for the halt.
It was also unclear how much volume or revenue Tesla would lose due to the production halt. The Fremont plant has an annual production capacity of 500,000 Model 3s and Model Ys combined.
Tesla said last month that it might face a temporary impact from a global semiconductor shortage.
Domino’s Pizza Inc. (DPZ-N) slipped after it missed estimates for quarterly revenue on Thursday, as the pizza chain faced stiff competition from rival fast-food chains and restaurants that reopened after the easing of some COVID-19 curbs.
Analysts have raised concerns over the ability of pizza chains, including Domino’s, to keep up heightened sales levels seen during the lockdowns in a post-pandemic world, as more dine-in restaurants open up and compete for customers.
Sales at Domino’s U.S. stores open for more than a year rose 11.2 per cent, missing market estimates of 12.48 per cent, according to Refinitiv IBES data.
Net income rose to US$151.9-million, or US$3.85 per share, from US$129.3-million, or US$3.12 per share, a year earlier.
Total revenue rose to US$1.36-billion from US$1.15-billion in the fourth quarter ended Jan. 3, compared with analysts’ estimates of US$1.39-billion.
Best Buy Co Inc. (BBY-N) plummeted after it signaled a slowdown in the coronavirus crisis-driven demand for remote-work computer equipment on Thursday as it missed holiday-quarter sales estimates.
More people setting up home offices and schools switching to remote learning pushed up demand for laptops, webcams, and other computer accessories last year, making Best Buy one of the bigger retail winners of the COVID-19 pandemic.
Best Buy Chief Financial Officer Matt Bilunas, however, said the company was unsure how the rollout of vaccines would affect consumer demand and shopping patterns.
“The demand for technology remains at elevated levels. However, there is a high level of uncertainty related to the impacts of the COVID-19 pandemic that makes it difficult to predict how sustainable these trends will be,” he said.
The consumer electronics retailer forecast full-year comparable sales growth between a fall of 2 per cent and a rise of about 1 per cent, below analysts’ estimates of a 1.6-per-cent increase, according to Refinitiv IBES data.
The company’s comparable sales rose 12.6 per cent in the fourth quarter ended Jan. 30, missing expectations of a 14.4-per-cent increase. The sales growth was also slower than the 23-per-cent jump recorded in the third quarter.
Excluding one-time items, the company earned US$3.48 per share, beating analysts’ estimates of US$3.45 per share.
Nvidia Corp. (NVDA-Q) was lower after it forecast better-than-expected first-quarter revenue on Wednesday, betting on strong demand for its graphic chips used in gaming devices and data centers.
As people wait for vaccine rollouts, extended stay-at-home has sustained the demand for chips used in personal computers, gaming devices and data center infrastructure that enable remote working.
While Nvidia has been known for its graphic chips, its aggressive push in the data centers market has allowed it to become the most valuable semiconductor maker by market capitalization, eclipsing rivals Intel Corp and Advanced Micro Devices.
The company expects first-quarter revenue of US$5.30-billion, plus or minus 2 per cent, above analysts’ average estimate of US$4.51-billion.
Revenue in the quarter ended. Jan. 31 rose to US$5-billion from US$3.11-billion, a year earlier. Analysts on average were expecting it to be US$4.82-billion, according to IBES data from Refinitiv.
With files from staff and wires