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A look at North American equities that headed in both directions

On the rise

Yamana Gold Inc. (YRI-T) was up after announcing on Tuesday it has accepted a US$4.8-billion takeover bid from Agnico Eagle Mines Ltd. (AEM-T) and Pan American Silver Corp. (PAAS-T), spurning a previous offer from South Africa’s Gold Fields, it said on Tuesday.

Agnico and Pan American made a cash-and-stock offer for Yamana on Friday, trumping Gold Fields’ bid.

Andrew Willis: Agnico Eagle finds a novel way to reduce the political risk of acquiring Yamana’s South American mines

Gold Fields had agreed in May to buy Yamana in an all-stock deal valued at US$6.7-billion but its shares slumped after the deal was announced, denting the valuation.

At Thursday’s close the Gold Fields offer was worth a little more than US$4-billion.

Yamana said its board has changed its recommendation on the pending deal with Gold Fields and now unanimously recommends shareholders reject that takeover at a vote on Nov. 21.

The switch follows Gold Fields’ decision not to change its original offer.

Under the terms of the original agreement, Yamana will have to pay Gold Fields US$300-million for breaking off the deal.

Shares of TransAlta Corp. (TA-T) soared on Tuesday after it increased its dividend as it reported a third-quarter profit compared with a loss a year ago and raised its financial guidance for the year.

The Calgary-based power utility says it will now pay a quarterly dividend of 5.5 cents per share, up from five cents per share.

The increased payment to shareholders came as TransAlta says it earned a profit attributable to common shareholders of $61-million or 23 cents per diluted share for the quarter ended Sept. 30 compared with a loss of $456-million or $1.68 per diluted share a year ago.

Revenue for the quarter totalled $929-million, up from $850-million in the third quarter of 2021.

In its guidance, TransAlta says its adjusted earnings before interest, taxes, depreciation and amortization for its full year is now expected to be in a range from $1.38-billion to $1.46-billion compared with its original guidance for between $1.065-billion and $1.185-billion.

The company also says its free cash flow is now expected to be in a range of $725-million to $775-million compared with earlier guidance for between $455-million and $555-million.

Pet Valu Holdings Ltd. (PET-T) jumped with the premarket release of better-than-expected third-quarter results, driven by a 14.7-per-cent year-over-year increase in same-store sales.

The Markham., Ont.-based retailer announced adjusted earnings per share of 43 cents, up 10 per cent and above the Street’s forecast by 6 cents.

Concurrently, it raised its 2022 guidance. It’s now expecting EPS in a range of $1.56 to $1.58 from $1.47 to $1.51 previously. That points to a fourth quarter of 40 cents, in line with the consensus estimate of 41 cents.

“Pet Valu’s revenue growth of 20 per cent, and SSS growth of 15 per cent are impressive given the economic slowdown and support our thesis that the pet industry exhibit recession resilient characteristics. Overall, we believe investors will react positively to these results,” said Sitfel analyst Martin Landry in a note.

Maple Leaf Foods Inc (MFI-T) was higher after it reported a third-quarter loss of $229.5-million as it took a one-time charge related to the value of its plant protein business.

The company says the loss amounted to $1.86 per share for the quarter ended Sept. 30 compared with a profit of $44.5-million or 36 cents per share in the same quarter last year.

Maple Leaf says its most recent quarter included a $190.9-million one-time non-cash impairment charge related to its plant protein group and a $31.5-million decrease in the fair value of biological assets.

On an adjusted basis, Maple Leaf says it lost a penny per share in its latest quarter compared with an adjusted profit of 38 cents per share in the same quarter last year as a result of weaker commercial performance due to inflation and labour challenges.

Sales in the quarter totalled $1.23-billion, up from $1.19-billion in the third quarter of 2021.

The company says the increase was driven by higher sales in its meat protein group, partially offset by lower sales in the plant protein group.

DuPont de Nemours (DD-N) beat Wall Street expectations for third-quarter profit as strong demand for electronics and other industrial products helped it offset cost pressures, sending its shares up.

The industrial materials maker also announced a new US$5-billion share repurchase program and said it plans to retire US$2.5-billion in long-term debt, but kept its full-year sales forecast unchanged.

The company has been grappling with rising costs for raw materials and energy due to a decades-high inflation, prompted by the pandemic and now intensified by Russia’s invasion of Ukraine.

DuPont Chief Financial Officer Lori Koch, however, said for the fourth quarter, “expect demand to remain strong in most end-markets, notably water, industrial and auto adhesives, but do anticipate continued softness in consumer electronics globally.”

Sales from the electronics and industrial unit, one of the company’s highest revenue generating segments, rose 2.9 per cent to US$1.51-billion in the reported quarter, while the water and protection segment raked in US$1.53-billion, up nearly 10 per cent from a year earlier.

Sustained demand helped the company shore up third-quarter revenue of US$3.3-billion, up nearly 4 per cent from last year.

Its adjusted earnings of 82 US cents per share in the three months ended Sept. 30, came above analysts’ average expectation of 79 US cents per share.

Meanwhile, net income fell to US$376-million, or 73 US cents per share, from US$404-million, or 75 US cents per share, a year earlier.

On the decline

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Tilray Brands Inc. (TLRY-T) gained modest ground, but Cronos Group Inc. (CRON-T) and Canopy Growth Corp. (WEED-T) both slipped on Tuesday.

The sector tends to move on regulatory headlines, including prospects for legalization efforts. Odds of friendlier cannabis legislation increase with a Democratic majority, according to Strategas.

Algoma Steel Group Inc. (ASTL-T) dropped after it reported revenue of $599.2-million for its fiscal second quarter ended Sept. 30, compared to $1.01-billion in the prior-year quarter.

Net income of $87.2-million or 36 cents per share compared to $288.2-million or 4.02 per diluted share in the prior-year quarter. The expectation was for earnings to come at 46 cents, according to S&P Capital IQ.

“As previously disclosed, the fiscal second quarter presented a number of operational challenges that adversely impacted our results, while we worked against the backdrop of steel pricing uncertainty,” stated CEO Michael Garcia. “We are focused on overcoming those transitory events to return our facilities to full operating capacity.”

The company said it estimates the operational challenges to have a financial impact of $130-million on adjusted EBITDA, with approximately 60 per cent incurred in the second fiscal quarter and the rest in its third fiscal quarter.

TripAdvisor Inc.’s (TRIP-Q) shares sank on Tuesday, a day after the online travel firm reported a weak quarterly profit and flagged a slowdown in revenue in the current quarter.

Currency fluctuations, primarily in euros, shaved off revenue growth by about 11 percentage points during the third quarter, compared with a year earlier.

Higher marketing expenses also dragged down TripAdvisor’s results, with the company posting adjusted profit of 28 US cents per share for the third quarter versus analysts’ average expectations of 38 US cents per share, according to Refinitiv data.

U.S. travel booking firms are spending heavily on marketing to get more people to book flights and accommodations on their apps and websites, as they look to cash in on a post-pandemic boom in tourism.

TripAdvisor’s selling and marketing costs jumped 5 per cent to US$234-million during the quarter, and the company said it expects marketing spend in the fourth quarter to yield benefits next year.

The firm also flagged that its revenue is set to rise in low-single digits compared with 2019 levels, implying a modest slowdown from third quarter.

Lyft Inc. (LYFT-Q) shares sank on Tuesday on signs that competition from bigger rival Uber (UBER-N) was stalling user growth and eating into the market share of the ride-hailing firm.

At least 14 analysts slashed their price targets on Lyft by as much as US$23 after its third-quarter results, in stark contrast to the warm reception Uber received after its bumper holiday-quarter forecast.

Active riders on Lyft’s platform grew just 7.2 per cent to 20.3 million in the July-September period, the slowest pace this year and a million below market expectations. Uber, which controls a bigger chunk of the market, posted a 22-per-cent rise in active riders.

“We believe Uber has done a much better job at rebuilding driver supply, likely leaving Lyft with a structurally smaller share of the market than it had pre-pandemic,” Atlantic Equities analyst James Cordwell said.

When rideshare ground to a halt during lockdowns, long-time market leader Uber’s delivery business had given it an edge over pureplay Lyft.

“While we think Lyft will remain the second-largest ridehailing platform in the U.S., we are now assuming Uber will slightly increase its market share over Lyft during the next few years,” Morningstar analyst Ali Mogharabi said.

Lyft’s stock has lost more than two-thirds of its value this year, far more than Uber’s 34-per-cent decline.

Take-Two Interactive Software Inc. (TTWO-Q) lowered its annual sales forecast on Monday after the bell, as the videogame publisher took a hit from this year’s surge in the dollar and a broader industry slump, sending its shares plummeting.

The move follows a similar cut by rival Electronic Arts (EA-Q) and shows how the sector is struggling with a demand drop caused by the lack of major new titles, lifting of COVID-19 curbs and lower spending from inflation-hit consumers.

Take-Two said it now expects full-year adjusted sales to be between US$5.4-billion and US$5.5-billion, compared with US$5.8-billion to US$5.9-billion projected previously.

“Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile,” Chief Executive Officer Strauss Zelnick said in a statement.

In May, Take-Two closed its US$11-billion buyout of mobile-focused Zynga, merging the publisher of best-selling personal computer and console games including Grand Theft Auto with the creator of FarmVille.

But the results show that was not enough to prop up its mobile gaming business, where player spending is under pressure because of runaway inflation and the cost of living crisis.

With files from Brenda Bouw, staff and wires

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