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

On the rise

Royal Bank of Canada (RY-T) was higher after it reported $4-billion in quarterly profit as the lender recovered loan loss provisions and benefitted from a spike in investment banking revenue.

For the three months that ended April 30, RBC earned $2.76 per share, compared with profit of $1.48-billion, or $1 per share, in the same quarter last year.

After adjusting for certain items, RBC said it earned $2.79 per share, well ahead of analysts’ consensus estimate of $2.47 per share, according to Refinitiv.

A major reason profits are soaring is that RBC recovered $96-million in provisions for credit losses in the quarter. Those funds had previously been set aside to cover loans that might default. In the same quarter last year, RBC earmarked $2.83-billion in provisions, which took a large bite out of its 2020 profits.

In the fiscal second quarter, RBC set aside $177-million against loans that are past due, but recovered $260-million in previous provisions for loans that are still performing, as economic forecasts and the bank’s outlook for credit brightened.

Bank of Montreal and Canadian Imperial Bank of Commerce also reported sharp declines in loan loss provisions this week, reclaiming some funds from their reserves against losses.

- James Bradshaw

Canadian Imperial Bank of Commerce (CM-T) was also higher as its second-quarter profit more than tripled from its pandemic low a year ago, boosted by plunging loan loss provisions and strong results from capital markets.

For the three months that ended Apr. 30, CIBC earned $1.65-billion, or $3.55 per share, compared with $392-million, or 83 cents per share, in the same quarter last year.

On an adjusted basis, CIBC said it earned $3.59 per share, which was much higher than the consensus estimate among analysts of $3.01 per share, according to Refinitiv.

The largest swing from a year ago was in provisions for credit losses - the money banks set aside to cover loans that may default. In the quarter, CIBC earmarked just $32-million in new provisions, compared with $1.4-billion a year ago, and $147-million in the first quarter.

- James Bradshaw

Nutrien Ltd. (NTR-T) rose after Bloomberg News reported BHP Group is in discussions with Saskatoon-based fertilizer maker about a partnership in the miner’s potash project in Canada.

Potential options include Nutrien acquiring a stake in the Jansen, Sask., mine, or becoming an operator and selling the potash through its channels, the report said, adding that the talks were private and there was no guarantee of a deal yet

Investors have raised concerns over the Jansen project recently, worried that a potash oversupply over the next decade could crimp returns.

Australia-based BHP is the world’s biggest listed miner, but does not produce potash, a crop nutrient farmers spread to increase yields.

Nutrien is the biggest global fertilizer producer by capacity.

Nutrien buying a stake in Jansen makes no sense for either company, BMO Capital Markets analyst Joel Jackson said in a note. A broader joint venture between Nutrien and BHP involving the potash assets of both companies has more potential, Jackson said.

Kitchener, Ont.-based Waterloo Brewing Ltd. (WBR-T) increased in the wake of reporting first-quarter fiscal 2022 earnings before interest, taxes, deprecation and amortization jumped 52.4 per cent year-over-year to $3.2-million. Revenue rose 51.5 per cent.

The craft brewer said total volume of products sold increased 57 per cent with every brand in its portfolio experiencing year-over-year growth for the eighth consecutive quarter.

“We are happy with our strong start to the year and our record first quarter results,” said President and CEO George Croft. “Our owner brands’ volume continues to grow at double-digits and our co-manufacturing of high-value global beverage brands more than doubled. We are growing in all sales channels and significantly outpacing the balance of the industry.”

Field Trip Health Ltd. (FTRP-CN), a Toronto-based psychedelic therapy developer, saw gains after the premarket announcement that it has received conditional approval to list its common shares on the Toronto Stock Exchange.

Upon completion of the final listing requirements, its shares will be delisted from the CSE and commence trading on the TSX under the trading symbol “FTRP.”

“Receiving conditional acceptance to move to Canada’s largest exchange is a significant milestone for Field Trip and the emerging psychedelics industry more broadly,” said CEO Joseph del Moral. “While our listing on the TSX will provide greater visibility for Field Trip in the markets and broaden our access to additional Canadian and international investors, we continue to work towards further enhancing liquidity for global investors in Field Trip, including exploring cross-listings onto U.S. exchanges.”

Best Buy Co Inc. (BBY-N) raised its annual sales forecast on Thursday, saying the latest round of stimulus checks had kept consumers buying home electronics, while acknowledging that a reopening economy threatens to slow growth later in the year.

Shares of the retailer, which also raised its fiscal 2022 share buyback forecast by US$500-million to US$2.5-billion, rose.

Best Buy was among the biggest retail winners during most of the health crisis as stuck-at-home Americans set up remote workspaces and invested in home appliances leading to a surge in sales of laptops, washing machines, refrigerators and other electronics.

The arrival of US$1,400 stimulus cheques in March helped sustain that demand, Best Buy Chief Executive Officer Corie Barry said.

The company forecast second-quarter comparable sales to rise 17 per cent, compared with analysts’ average estimate of a 5.8-per-cent increase, according to IBES data from Refinitiv.

Best Buy expects full-year comparable sales to rise 3 per cent to 6 per cent, compared to a previous forecast range of a fall of 2 per cent to a rise of 1 per cent.

However, the company said it still expects comparable sales in the second half of its fiscal year to fall as consumers switch to spending more on activities such as eating out, traveling and other social events.

Excluding one-time items, the company earned US$2.23 per share, beating analysts’ estimates of US$1.39 per share.

Gap Inc. (GPS-N) rose after announcing it will begin selling a new home goods line exclusively through Walmart Inc.’s (WMT-N) website next month under a multiyear partnership.

The collection of more than 400 items is Gap’s first venture into the home category and it’s selling everything from bedding and bath goods to home decor. The collection will appear on Walmart’s site on June 24. They will eventually make it into Walmart stores, the companies said, though no financial terms were disclosed Thursday.

Walmart has aggressively expanded home goods sales, a category that grew even hotter during the pandemic as spending shifted from dining out and travel, to the place where families spent most of the last year.

Anthony Soohoo, executive vice president of Walmart’s home division, told The Associated Press that adding a brand like Gap will attract new customers.

Gap, at the same time, is looking for other avenues for growth with its Gap and Banana Republic stores struggling. Its low-price Old Navy and athletic-inspired Athleta businesses have been the bright spots.

On the decline

Champion Iron Ltd. (CIA-T) slid after releasing fourth-quarter financial results late Wednesday that fell short of the Street’s expectations.

The Montreal-based company reported revenue of $397-million, missing the consensus forecast by 5 per cent ($418-million). EBITDA of $276-million was 9 per cent below the Street ($303-million), while earnings per share of 32 cents was a penny short of estimates.

“While the FQ4 results set new quarterly highs for Revenue, EBITDA and EPS, the results missed our estimates and consensus and we believe the market will remain more focused on the current correction in the iron ore price,” said Laurentian Bank Securities analyst Jacques Wortman in a research note.

Guelph, Ont.-based Canadian Solar Inc. (CSIQ-Q) fell after announcing it has filed with the U.S. Securities and Exchange Commission a plan to offer and sell an aggregate of up to US$150-million of its common shares through an at-the-market program.

Nvidia Corp. (NVDA-Q) was lower after it forecast second-quarter revenue above analysts’ estimates on Wednesday, but the company could not say for certain how much of its recent revenue rise was driven by the volatile cryptocurrency-mining market.

Demand for Nvidia graphics chips for video gaming rigs boomed through the pandemic, helping further boost sales after several years of rapid growth for data center chips for artificial intelligence applications such as image recognition.

But on Wednesday investors again seemed put off by a surge in purchases of Nvidia chips for cryptocurrency mining, which tends to occur when the value of the currencies rises. To better separate out volatile demand for crypto-mining chips from its other more stable business lines that investors are tracking closely, Nvidia has tried to use technical changes to steer miners away from its gaming chips and toward purpose-built chips for mining.

In a release, Chief Executive Jensen Huang said the company continues “to make headway” with its planned US$40-billion acquisition of British chip technology firm Arm Ltd, a deal that Nvidia has said will close in March 2022 but has drawn scrutiny from regulators in the United States and Britain and also needs approval from European and Chinese authorities.

The company expects current-quarter revenue of US$6.30-billion, plus or minus 2 per cent, compared with analysts’ estimates of US$5.5-billion, according to IBES data from Refinitiv.

The company’s total revenue was US$5.66-billion during the first quarter, beating estimates of US$5.41-billion, according to Refinitiv data. Adjusted profit was US$3.66 per share, above analyst estimates of US$3.28.

With files from staff and wires

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