A roundup of some of the North American equities making moves in both directions today
On the rise
CAE Inc. (CAE-T) shares were up over 5 per cent after S&P Dow Jones Indices announced late Wednesday that the stock will be joining the TSX 60 index prior to next Tuesday’s opening. It will replace Brookfield Property Partners L.P., which is being combined into Brookfield Asset Management Inc.
Top U.S. railroad operator Union Pacific Corp. (UNP-N) was higher after it reported a 59-per-cent jump in its quarterly profit on Thursday, as it shipped more industrial chemicals, metals, petroleum, and liquefied petroleum gas.
The company’s net income for the second quarter, that ended on June 30, rose to US$1.798-billion from US$1.13-billion a year ago.
U.S. railroad companies have benefited from a pickup in economic activity across North America as COVID-19 restrictions ease, with CSX Corp. (CSX-Q) and Kansas City Southern (KSU-N) also reporting higher revenue.
Union Pacific, the largest U.S. railroad operator by market value, also said its second-quarter volumes increased 22 per cent.
The company’s revenue rose 29.7 per cent to US$5.504-billion from US$4.24-billion a year ago, while operating ratio — a key profitability metric — improved to 55.1 per cent from 61 per cent.
AT&T Inc. (T-N)was flat in response to raising its full-year financial forecast as the wireless carrier emerged from the pandemic with more wireless and internet customers, and beat analyst estimates for phone subscribers and revenue in the second quarter.
The results come as AT&T is unwinding its heavy media investments to focus on its original business of providing phone and internet services.
Ahead of closing its deal to combine its media content in a deal with Discovery, AT&T said WarnerMedia continued to attract more customers to streaming service HBO Max and notched higher revenue as live sports and televised events resumed from the pandemic.
The company added 789,000 net new phone subscribers who pay a monthly bill during the quarter ended June 30, blowing past Wall Street estimates of 278,000 new subscribers, according to data from research firm FactSet.
The wireless carrier had lost 151,000 subscribers in the year-ago quarter at the height of the pandemic.
AT&T now expects 2021 revenue growth in the 2-per-cent to 3-per-cent range and adjusted earnings per share to rise in the low- to mid-single digits.
The company had previously guided revenue growth in the 1-per-cent range and adjusted earnings per share to be stable with the previous year.
Excluding items, AT&T earned 89 US cents per share, above estimates of 79 US cents.
Freeport-McMoRan Inc. (FCX-N) erased early declines in the wake of beating Wall Street expectations for second-quarter earnings on Thursday, as the miner benefited from higher demand and increased prices for copper.
Copper prices touched an all-time record high of US$10,747.50 a tonne in May. Bullish investors bet that demand for the red metal will increase further as the world economy recovers from COVID-19 woes and as investments into green energy sectors ramp up.
The average realized price Freeport received per pound of the red metal rose 70 per cent in the second quarter, while copper production increased about 19 per cent to 913 million pounds.
The company said production of molybdenum, a battery metal used in airbags, stood at 20 million pounds compared to 19 million pounds a year earlier.
The company lowered its capital expenditure guidance for 2021, excluding Indonesia smelter expenditures, to about US$2.2-billion from US$2.3-billion.
The copper producer’s adjusted net income attributable to common stock was US$1.14-billion, or 77 US cents per share, in the three months ended June 30, compared with US$44-million, or 3 US cents per share, a year earlier.
Analysts on average had expected a profit of 76 US cents per share, according to IBES data from Refinitiv.
Chemicals maker Dow Inc. (DOW-N) gained as it forecast better-than-expected sales for the current quarter, betting on increased industrial production and higher consumer spending as economies emerge from pandemic-led lockdowns.
Dow also beat estimates for second-quarter profit and revenue as its chemicals - used in everything from plastic and food packaging to textiles, electronics and paints - have seen a steady rise in prices on the back of strong consumer and industrial demand as well as lower inventories.
The company said it was expecting third-quarter net sales of between US$13.75-billion and US$14.25-billion, well above the estimates of US$12.64-billion, according to Refinitiv IBES data.
“Looking ahead, we expect earnings momentum from additional improvements in consumer spending, international travel and industrial production,” Chief Executive Officer Jim Fitterling said.
Mr. Fitterling’s comment comes as the spread of the highly contagious Delta variant of the novel coronavirus is fueling fears of a pandemic resurgence and lockdowns across different parts of the globe.
On the decline
Newmont Corp. (NGT-T) slid despite its profit for the second quarter topped Wall Street’s estimates on Thursday, as the top gold producer benefited from slightly higher prices of the precious metal.
Bullion averaged about US$1,814 in the second quarter, a marginal increase from the first, as a weak dollar and safe-haven buying due to COVID-19 pandemic-related uncertainty underpinned prices.
Newmont said its average realized gold price jumped 4.1 per cent to US$1,823 per ounce in the quarter. Its gold production fell marginally to 1.45 million ounces sequentially, but was up 15 per cent from the last year.
The Denver, Colorado-based miner also said its all-in sustaining costs (AISC) for the quarter, an industry metric that reflects total costs associated with production, fell to US$1,035 per ounce from US$1,039 per ounce in the Jan-March period.
The company’s adjusted profit rose to US$670-million, or 83 US cents per share, in the quarter ending June 30, from US$594-million, or 74 US cents per share, in the previous quarter.
Analysts on an average expected a profit of 78 US cents per share, according to Refinitiv IBES data.
The Toronto-based miner now projects total attributable production of 565,000 to 605,000 ounces, down from a range of 630,000 to 700,000 ounces previously. Its cash costs per ounces sold rose to $1,115-$1,150 from $930-980, leading to higher all-in sustaining costs ($1,395-$1,435 from $1,230-$1,280).
“Total Company-wide attributable production guidance for 2021 has been reduced due to lower actual production in the first half of 2021 from the Westwood and Rosebel mines and their anticipated output for the remainder of 2021, partially offset by higher production at the Essakane mine in the first half of 2021,” it said. “Total per-ounce costs guidance for 2021 has been increased mainly to reflect the lower total attributable production guidance. Site capital expenditure estimates are expected to be slightly lower than previously provided guidance (news release dated January 19, 2021), primarily due to an expected reduction in planned work at Rosebel. In accordance with IFRS, the Company is reviewing the approximately $120 million carrying amount of the Westwood mine to determine whether there is any indication of impairment, and if so, whether an adjustment is necessary.”
Precision Drilling Corp. (PD-T) finished narrowly lower following the premarket release of second-quarter financial results that missed estimates.
The Calgary-based company reported earnings before interest, taxes, depreciation and amortization of $28.9-million, missing the Street’s projection of $37.6-million.
However, Precision currently has 52 active rigs in Canada, above both first-quarter highs and pre-pandemic levels. It expects further reactivations in the coming weeks
“Given the EBITDA miss was primarily for non-operational share-based compensation, we expect the market to focus on the strong operational results in Q2, management commentary about Canada’s outlook being ‘exceptionally bright’ for the next 12 months and its international segment possibly seeing a few rig reactivations later this year/early next year,” said ATB Capital Markets analyst Waqar Syed.
“Management commentary on the outlook was very bullish, and given that the miss is from non-operational reasons, we view the results positively, especially in light of the recent pullback in the stock price (down 14 per cent since June 24th).”
American Airlines Group Inc. (AAL-Q) slipped despite beating Wall Street estimates for second-quarter revenue on the back of a recovery in demand as leisure travel rebounds from pandemic lows.
Travel demand has surged thanks to speedy COVID-19 vaccinations and easing restrictions across the globe. Airlines are now recalling crew on voluntary leave and recruiting new employees ahead of the holiday season.
The airline reported positive cash flow in the second quarter for the first time since the pandemic began, reversing a trend of cash burn of about US$100-million a day when global travel had ground to a halt.
The airline reported a cash build rate of about US$1-million per day in the second quarter.
Excluding items, the company posted a second-quarter net loss of US$1.1-billion, or US$1.69 per share.
The U.S airline posted a net income of US$19-million, or 3 US cents per share, in the quarter ended June 30, compared with a loss of US$2.07-billion, or US$4.82 per share, a year earlier.
Total operating revenue jumped 361 per cent to US$7.48-billion. Analysts, on average, expected a revenue of US$7.34-billion, according to Refinitiv data.
Kinder Morgan (KMI-N) declined in the wake of cutting its 2021 profit forecast after the bell on Wednesday, just three months after the U.S. pipeline operator had raised its estimates following a surge in demand for natural gas during the February winter storm.
Kinder Morgan had earned about US$1-billion during the Texas cold storm which swept parts of the United States last quarter, knocking out nearly half of the state’s power plants and sending prices for natural gas and electricity up to record levels.
The company lowered its full-year profit forecast to US$1.7-billion, from as much as US$2.9-billion it outlined in April, and lower than the US$2.1-billion it originally forecast in January.
Kinder Morgan, which transports nearly 40 per cent of the natural gas consumed in the United States, said natgas transport volumes fell 1.8 per cent in the second quarter from the first, while total refined product volumes rose 16.7 per cent.
The company, which closed its acquisition of Stagecoach Gas Services this month, said it expects to generate distributable cash flow of US$5.4-billion for this year, compared with previous expectations of as much as US$5.3-billion.
Net loss attributable to Kinder Morgan stood at US$757-million, or 34 US cents per share, in the second quarter ended June 30, compared with a profit of US$1.41-billion, or 62 US cents per share, in the first quarter.
The pipeline operator took a non-cash impairment charge of US$1.6-billion in the second quarter related to anticipated lower volumes and rates on contract renewals for its South Texas natural gas processing and gathering assets.
Excluding items, the company earned 23 US cents per share, above estimates of 19 US cents, according to Refinitiv IBES data.
Texas Instruments Inc. (TXN-Q) fell in the wake of forecasting current-quarter revenue slightly below Wall Street estimates on Wednesday, leaving investors concerned about the chipmaker’s ability to meet searing demand in the face of a global shortage.
The Dallas, Texas-based company has been ramping up its production capacity even as supply constraints persist, eyeing a boom in demand from many of its end markets. In June, TI said it would buy one of Micron’s factories for US$900-million, making it the company’s fourth analog chip-manufacturing plant.
“The common perception in the market is that demand still remains very strong, and many investors expect above-average revenue growth for the next couple of quarters,” said Edward Jones analyst Logan Purk.
“This guidance clearly flies in the face of that belief.”
The company expects third-quarter revenue between US$4.40-billion and US$4.76-billion, with the midpoint below analysts’ expectations of US$4.59-billion, according to IBES data from Refinitiv.
However, the company beat Wall Street estimates for second-quarter results, helped by a more than 40-per-cent rise in revenue from both its analog chips and embedded processing businesses.
With files from staff and wires