A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of The Stars Group Inc. (TSGI-T) jumped 14.8 per cent on Thursday after announcing a long-term deal with FOX Sports, a unit of Fox Corp. (FOXA-Q), after the bell on Wednesday for what they call a “first-of-its kind national media and sports wagering partnership in the United States.”
“The Stars Group and FOX Sports expect to launch two products in the Fall of 2019 under the FOX Bet umbrella,” they said in a release. "One will be a nationwide free-to-play game, awarding cash prizes to players who correctly predict the outcome of sports games. The second product, which will be named FOX Bet, will give customers in states with regulated betting the opportunity to place real money wagers on the outcome of a wide range of sporting events in accordance with the applicable laws and regulations.
With the commercial agreement of up to 25 years and associated product launches, Fox will acquire 14,352,331 newly issued common shares in The Stars Group, or 4.99 per cent of its issued and outstanding common shares, at a price of $16.4408 per share.
In a research note, Echelon Wealth analyst Gianluca Tucci said: “Preliminary U.S. sports betting market estimates are very lucrative; we believe this announcement represents a watershed moment with a significant partner whom TSGI can leverage as a very low-cost customer acquisition channel as it carefully places a strategic and significant wager on the U.S. market. We believe this is a significant win for both parties as advertising, television, digital content, and wagering all drive user experience and raise the level of engagement. This type of deal furthers our belief that TSGI is rightfully deserving of a premium multiple relative to peers.”
Franco-Nevada Corp. (FNV-T) increased 3.5 per cent after its first-quarter results blew past the expectations of the Street.
After the bell on Thursday, the company reported EBITDA and cash flow per share of $141-million and 72 cents per share, topping the analysts’ consensus forecast of $132-million and 65 cents.
Industrial Alliance Securities analyst George Topping said: “Franco-Nevada continues to demonstrate that it can deliver even in a poor gold market. Candelaria continues its recovery while Cobre Panama is coming on-line. Longer term, we estimate the GEO portfolio will grow by an average of 6-7 per cent per annum over the next five years as Cobre Panama reaches steady state.”
The theatre company reported a loss of $7.4-million, or 12 cents per share, in the quarter, versus a profit of $15.2-million or 24 cents per share during the same period a year ago, as attendance dropped 15.6 per cent.
At the same time, Cineplex announced its monthly dividend is rising to 15 cents per share (or $1.80 annually) from 14.5 cents (or $1.74).
“Although the Q1 results were impacted by the anticipated soft box office product, we continued to execute upon our diversification strategy and are encouraged by the results from our new businesses which resulted in Q1 records for media revenue, amusement revenue and other revenue," said president and CEO Ellis Jacob in a statement.
The Kingsey Falls, Que.-based company reported sales of $1.23-billion, up 12-per-cent year-over-year, while earnings per share rose by a penny to 14 cents.
AltaCorp analyst Nate Heywood said: “U.S. Propane Distribution segment reported a strong quarter with EBITDA of $125-million, a 209-per-centincrease over Q1/18. The significant increase was a result of the contributions of both the NGL Propane acquisition (made in Q2/18) and various tuck-in acquisitions. With the integration of NGL Propane, the customer mix changed significantly, with a larger proportion of volumes allocated to the higher margin residential customers.”
On the decline
Raymond James analyst Kenric Tyghe said: “Canadian Tire’s first quarter adjusted EPS of $1.12 was a miss versus a (noisy) consensus estimate of $1.38. The miss was largely driven by essentially in line revenue growth of 2.8 per cent, on higher than expected comparable store sales of 6.1 per cent. While the comparable sales growth across all banners was surprisingly strong (particularly given the CTR comp of 5.8 per cent), the cost of driving that growth (which was higher than expected as reflected in the material retail gross margin compression of 107 bp).”
Spin Master Corp. (TOY-T) dropped 4.5 per cent after reporting a loss of US$20.9-million in the first quarter, hurt by the closure of Toys R Us stores south of the border.
In a research note, Raymond James analyst Kenric Tyghe said: “A tough expected quarter proved even tougher as 1Q19 revenues declined 16.3 per cent to $239.0-million (versus consensus of $252.0-million), for a very disappointing adjusted EPS miss of ($0.12) versus consensus of $0.10. While our preview highlighted the tough absolute and (peer) relative sales performance in the quarter (compounded by a material negative Easter timing shift of an estimated $25.0-million), the revenue performance was a negative surprise, compounded by an even higher than expected gross margin compression and SG&A deleveraging. The decline in revenue(and gross product sales, which decreased 16.5 per cent to $240.5-million) was driven by the absence of Toys R Us, the Easter timing shift, and foreign exchange headwinds. The weak top line performance was further impacted by massive (704 bp) gross margin compression and higher SG&A costs in quarter, for adjusted EBITDA of $7.0-million (versus an adjusted for IFRS 16 $45.6-million in 1Q18) and consensus of $29.4-million. While the results were materially more negative than expected by us and the Street, management has maintained full year guidance, leading us to conclude that while this quarter was even more of a kitchen-sinking exercise than expected, industry dynamics (and the company outlook having cleared the channel), are more positive (and weighted) in 2H19E than expected.”
The media and telecommunications company reported revenue of $1.03-billion before the bell, up 2.5 per cent year-over-year and matching the expectation on the Street. EBITDA increased 1.2 per cent to $421-million, but fell short of analysts’ forecast of $431-million. Adjusted earnings per share of 44 cents equaled projections.
Quebecor also hiked its quarterly dividend to 11.25 cents from 5.5 cents.
Desjardins Securities analyst Maher Yaghi said: “QBR’s 1Q19 revenue was in line with expectations, but profitability was pressured by higher subsidy costs. Subscriber numbers were broadly in line with expectations on wireline but slightly above expectations on wireless, supported by Fizz. QBR more than doubled its dividend, bringing the stock’s yield to 1.4 per cent before the market open. Overall, we believe the stock’s elevated valuation is likely to preclude the name from outperforming its peers in the medium term.”
Magna International Inc. (MG-T) was down 10 per cent after it lowered its 2019 profit forecast, as it expects higher costs on certain programs and lower earnings from a transmission joint venture in China.
The telecommunications company reported operating revenue and adjusted earnings per share of $3.51-billion and 75 cents, which matched analysts’ projections.
It also increased its quarterly dividend to 56.25 cents from 54.5 cents.
“TELUS achieved strong financial and operational results in the first quarter, including high quality smartphone-centric mobile phone net additions and vigorous connected device growth in wireless, alongside ongoing robust wireline customer growth”, said president and CEO Darren Entwistle in a statement. “Without question, our continued strong performance is owing in no small part to our team’s unparalleled dedication to providing exceptional customer experiences. TELUS, once again, achieved industry-leading wireless loyalty, with a record first quarter low mobile phone churn of 1.02 per cent. This unrelenting commitment to our Customers First promise is buttressed by our meaningfully differentiated product offerings, as well as the ongoing significant investments we are making synergistically in our world-leading broadband network and technologies across both our wireless and wireline operations.”
The alternative asset manager said it earned US$1.26 billion or 58 US cents per diluted for the quarter for the period, versus a profit of US$1.86-billion or 84 US cents during the same period a year ago.
The marijuana producer reported revenue was $6.5-million in first quarter, up 120 per cent from $2.9-million during the same period a year ago. Analysts had expected $7-million.
“As we continue to invest in our business, our brands and R&D initiatives, our adjusted Ebitda will likely decline over 2019 but position the company for accelerated growth in 2020,” Chief Financial Officer Jerry Barbato said on a post-earnings conference call, according to Bloomberg.
With files from staff and wires