A roundup of some of the North American equities making moves in both directions today
On the rise
Canadian Pacific Railway Ltd. (CP-T) was higher after it refused to raise its bid for Kansas City Southern (KSU-N), and instead appealed to the board of the U.S. railway to reject a higher offer from rival Canadian National Railway Co. (CNR-T) on the grounds the U.S. regulator is unlikely to approve it.
CN outbid CP in the fight for KCS, offering US$29.8-billion or US$325 a share for the U.S. carrier. CP had offered US$25.2-billion or US$275 a share.
CP CEO Keith Creel Thursday morning described CN’s higher offer as “shocking” and called the Montreal rival an “interloper” that used debt to outbid his railway. He reiterated CP will not engage in a bidding war that would saddle the railway with too much debt.
“We feel it would be destructive to our mutual interests to engage in a bidding war in reaction to CN’s illusory offer, particularly where our existing CP-KCS merger agreement provides KCS’s shareholders with a significant premium,” Mr. Creel said in an open letter to KCS issued on Thursday morning.
- Eric Atkins
Lightspeed POS Inc. (LSPD-T) soared despite reporting a US$42-million net loss its latest quarter as COVID-19 lockdowns kept shoppers home, as the company believes a rebound is starting to materialize.
The Montreal-based e-commerce company says the loss amounted to 34 US cents per diluted share for the quarter ended March 31 compared with a loss of 21 US cents per diluted share a year earlier when it had fewer shares outstanding.
Chief executive Dax Dasilva said his company’s fourth quarter began with many provinces and countries implementing stay-at-home orders to quell COVID-19, but ended with a bright spot.
“As we exited (the quarter), we saw some regions begin to lift those restrictions and March proved to be a very strong month,” he told analysts on a conference call Thursday.
The company, which sells software for small and medium size retailers and restaurateurs, spent much of the last year helping its clients adopt e-commerce offerings to deal with the pandemic and a soaring interest in online shopping.
It also made several acquisitions.
Last month, Lightspeed closed its deal to buy New Zealand-based Vend Ltd., a cloud-based retail management software company.
The deal followed the US$440-million acquisition of ShopKeep, which helps restaurants and retailers accept payment and manage their business, as well as the purchase of restaurant software company Upserve.
“M&A has always been part of our strategy, but in the last six months, it’s been front and centre,” Dasilva said.
“Over-time we should continue to recognize the benefits of our M&A strategy across our entire business.”
In a research note, BTIG analyst Mark Palmer said: “Lightspeed POS (LSPD) this morning released a 4Q21 report featuring a sizeable revenue beat versus consensus estimates while management introduced FY22 financial guidance including a revenue outlook well above the consensus estimate. We expect LSPD’s shares, which are down by 22.5 per cent year-to-date, to gain a boost from the strong print and even stronger guidance.”
Heroux-Devtek Inc. (HRX-T) jumped higher with the premarket release of fourth-quarter 2021 results that exceeded the Street’s expectations.
The Quebec-based landing gear manufacturer reported revenue of $155-million, down 7 per cent year-over-year but above the consensus forecast of $153-million. Adjusted earnings per share of 28 cents beat analysts’ estimate by 4 cents.
In a research note, Desjardins Securities analyst Benoit Poirier said: “Overall, we are very pleased with the solid 4Q results across the board, especially the strong FCF generation. FCF of $67-million in FY21 represents an impressive FCF yield of 11.4 per cent, by far the highest among its US peers (average of 4.3 per cent). This is highly unjustified in our view and warrants the launch of the NCIB and our bullish stance on the name. We believe HRX is well-positioned to be active on the NCIB given its strong balance sheet.”
The company is authorized to purchase up to 7.475 million, or 10 per cent of its public float as at May 12.
Under a bid approved last May, the company was authorized to repurchase up to 7.46 million shares, but it did not repurchase any.
“In deciding to establish the NCIB, the Company believes that the market price of the common shares may not, from time to time, fully reflect their value and accordingly the purchase of the common shares would be in the best interest of the Company and an attractive and appropriate use of available funds,” it said.
Cisco Systems Inc. (CSCO-Q) closed higher a day after it cautioned that supply chain issues will linger through the end of 2021 and forecast its current-quarter profit below estimates.
The warning comes as all tech companies are facing a global chip shortage.
“Notwithstanding what’s going on in the supply chain, our revenue guide would have been higher, which could have probably flowed through to improving EPS as well,” Chief Executive Officer Charles Robbins said during an earnings call.
Cisco forecast fourth-quarter profit of 81 US cents to 83 US cents per share, compared with estimates of 85 US cents per share, and said it expected 6 per cent to 8 per cent revenue growth.
In an interview, Cisco Chief Financial Officer Scott Herren said the supply chain issues were temporary. For the third quarter ended May 1, the company reported a 7-per-cent rise in revenue to US$12.80-billion from a year earlier, above analysts’ average estimate of US$12.56-billion according to IBES data from Refinitiv.
“Double-digit growth in orders was something we’d not seen since 2012,” Mr. Herren said. “There’s a lot to feel good about right now.”
Cisco’s service revenue surged 8 per cent and product revenue rose 6 per cent, boosted by a sustained demand for its videoconferencing platform, virtual private network and cybersecurity products as offices remained closed despite accelerated COVID-19 vaccinations.
Excluding items, Cisco earned 83 US cents per share, above analysts’ estimates of 82 US cents per share.
Shares of Triple Flag Precious Metals Corp. (TFPM-T) were flat in its trading debut on Thursday after the Canadian mine financing company raised more than $250-million in an initial public offering, the biggest Toronto Stock Exchange mining debut since 2012.
Led by former Barrick Gold Corp executive Shaun Usmar, Triple Flag provides up-front financing to miners in exchange for a share of future revenue or production. It holds royalty interests in Alamos Gold Inc’s Young-Davidson mine in Ontario and Kirkland Lake Gold Ltd’s Fosterville underground mine in Australia.
Triple Flag, backed by Elliott Management Corp, said proceeds would repay debt. The stock was last trading at $15.67 compared to an offer price of $13.00.
The offering led by Bank of America Securities, Credit Suisse Group and Bank of Nova Scotia included a $37.5-million over-allotment, making it the fifth-largest metals and mining IPO in Canadian history behind Pretium Resources and the biggest in nine years, according to Refinitiv.
In July, Triple Flag agreed to pay $550-million to China Molybdenum Co Ltd (CMOC) for future production of precious metals at CMOC’s Northparkes mine in Australia.
The company in December 2019 pulled a stock market launch citing difficult conditions for new listings.
Shares of Oprah Winfrey-backed Oatly Group AB (OTLY-Q) jumped 30 per cent in their market debut on Thursday, valuing the Swedish oatmilk maker at about US$13-billion, as demand for plant-based food products surges globally.
Oatly’s strong debut, along with that of construction software firm Procore Technologies, is expected to restore short-term confidence in U.S. initial public offerings. That market has been rocked by recent inflation fears that forced investors to abandon growth stocks.
Shares of Sweden-based Oatly, whose investors also include rapper Jay Z and former Starbucks Corp head Howard Schultz, opened at US$22 a share.
The vegan milk maker, which has been widely credited for popularizing oatmilk in several countries, on Wednesday went public at US$17 a share, raising US$1.4-billion.
Oatly, which sells in more than 20 markets across Europe, the United States and China, is known chiefly for its oat milk products and has tie-ups with several U.S. cafes, including Starbucks. Oatly is so popular in some key markets that it has faced supply shortages.
See also: The big money is going vegan
On the decline
Toronto-based CCL Industries Inc. (CCL.B-T) was lower with the announcement of a normal course issuer bid to acquire up to 8 million of its Class B non-voting shares, or approximately 4.77 per cent of the public float.
“CCL’s management believes that such purchases are an appropriate and desirable use of available funds,” it said.
U.S. retailer Kohl’s Corp. (KSS-N) dropped despite raising its forecast for 2021 revenue and profit after topping first-quarter estimates on Thursday, as the U.S. department store operator bets on a shopping boom after a gloomy year due to the coronavirus pandemic.
U.S retailers, including Macy’s Inc. (M-N), TJ Maxx parent TJX Cos Inc. (TJX-N), Walmart Inc. (WMT-N) and Target Corp. (TGT-N), have all pointed to a rebound in demand for non-essential products as vaccinated Americans feel more comfortable to step out and shop.
“Along with a favorable consumer spending backdrop, we continue to see our key strategic initiatives gain traction and resonate with customers,” Chief Executive Officer Michelle Gass said in a statement.
Kohl’s forecast 2021 adjusted earnings to be between US$3.80 and US$4.20 per share, excluding certain charges, versus a prior range of US$2.45 to US$2.95.
The mid-priced retailer also said it was expecting net sales to increase in the mid-to-high teens percentage range, compared with its previous forecast for a rise in the mid-teens percentage range.
However, the sales forecast was largely below heightened analysts’ expectations of a 19.3-per-cent jump, according to IBES data from Refinitiv.
In the first quarter ended May 1, net sales rose about 70 per cent to US$3.66-billion, beating estimates of US$3.48-billion. Excluding items, the company earned US$1.05 per share, crushing estimates of 4 US cents.
Ralph Lauren Corp. (RL-N) lost ground in the wake of forecasting full-year sales below analysts’ estimates on Thursday, anticipating a further hit from store closures in parts of Europe and Japan due to COVID-19 curbs, even as demand rebounds in China and the United States.
The retailer, popular for its Polo shirts, said it expects fiscal 2022 revenue on a constant currency basis to increase about 20 per cent to 25 per cent. Analysts were expecting a 31.1-per-cent rise.
Net revenue rose to US$1.29-billion in the fourth quarter from US$1.27-billion a year earlier. Analysts on average had expected revenue of US$1.21-billion, according to Refinitiv IBES data.
The company reported a net loss of $74.1-million, or US$1.01 per share, compared with a loss of US$249.0-million, or US$3.38 per share, a year earlier.
With files from staff and wires