A roundup of some of the North American equities making moves in both directions today
On the rise
Telus Corp. (T-T) rose 0.6 per cent on Tuesday after announcing it has signed a deal to buy ADT Security Services Canada Inc. for roughly $700-million.
ADT Canada has approximately 500,000 customers and approximately 1,000 staff across the country.
Telus says the acquisition is a strategic fit with its national wireless service and PureFibre residential networks.
McCormick & Co Inc. (MKC-N) rose 6.8 per cent as the seasoning maker raised its full-year earnings forecast.
“For the 2019 fiscal year, based on its year-to-date performance, McCormick narrowed its projected growth ranges for sales, operating income and earnings per share as well as increased its earnings per share outlook. The company continues to expect another year of strong performance driven by its broad and advantaged flavor portfolio, effective growth strategies and focus on profit realization,” it said.
On the decline
Montreal-based Dorel Industries Inc. (DII.B-T; DII.A-T) plummeted 29.2 per cent after it said it has suspended its dividend, citing the impact of increased U.S. tariffs as well as a review of its third-quarter results.
Dorel said the dividend declared on Aug. 2 isn’t affected and will be paid on Oct. 2.
“The impact of the increase on Dorel businesses was still unclear at the end of the second quarter,” Dorel Dorel president and chief executive officer, Martin Schwartz said in a statement. “We raised prices midway through the third quarter and this has had several negative consequences.”
Hudson’s Bay Co. (HBC-T) was 2.5 per cent lower after the Globe’s Rachelle Younglai and Jeffrey Jones reported that, as its executive chairman seeks to privatize the retailer, his company is facing more uncertainty due to problems at one of its partners, WeWork, and further criticism from a dissident shareholder.
Richard Baker’s $1-billion privatization offer has the support of shareholders representing 57 per cent of HBC’s outstanding stock. Those shareholders include WeWork and private-equity company Rhone Capital LLC. ut the money-losing WeWork, the New York-based office-sharing company, was forced to withdraw its initial public offering on Monday and announced plans to focus on its core business after questions about its profitability and its future.
On Tuesday, HBC announced it has completed the sale of its remaining stakes in its European real estate and retail joint ventures to its partner, SIGNA Retail, for about $1.5-billion.
HBC also said it permanently repaid its outstanding $429-million term loan, "strengthening the balance sheet."
Canadian National Railway Co. (CNR-T) fell 3.5 per cent after an equity analyst at Jefferies downgraded its stock, believing its near-term set-up “has become more challenging.”
Pinnacle Renewable Energy Inc. (PL-T) dropped over 28 per cent after announcing after the bell on Monday it expects a shortfall in its guidance for adjusted earnings before interest, tax, depreciation, and amortization for Fiscal 2019.
“The expected guidance shortfall is driven by the ongoing sawmill curtailments in B.C., which has caused higher fibre and cash conversion costs, including maintenance and repair costs, at Pinnacle’s B.C. facilities due to a decreased and intermittent supply of sawmill residuals and a higher supply of more expensive harvest residuals being processed at the facilities,” the company said.
On Tuesday, a pair of equity analysts downgraded its stocks.
Discount brokerage company Charles Schwab Corp. (SCHW-N) said on Tuesday it is eliminating commissions for online trading of stocks, ETFs and options listed on U.S. or Canadian exchanges.
The company’s shares fell 9.8 per cent, dragging down those of its rivals. TD Ameritrade (AMTD-Q) shares slumped 25.7 per cent, while E*Trade (ETFC-Q) slid 16.5 per cent.
Schwab will reduce the commission to zero from US$4.95 per trade, starting Oct. 7, the company said.
“We estimate that this pricing reduction is equivalent to approximately $90-100 million in quarterly revenue, which roughly translates to 3-4 per cent of total net revenue,” Chief Financial Officer Peter Crawford said in a statement.
In reaction to the Schwab announcement, Toronto-Dominion Bank (TD-T), which owns an almost 43-per-cent stake in TD Ameritrade, was down 2.6 per cent.
National Bank analyst Gabriel Dechaine expects “modest” EPS downside for TD from the news.
He said:"[TD’s] share of AMTD’s earnings represents about 10 per cent of its consolidated total (though AMTD has been a disproportionate contributor to TD’s earnings growth over the past two years at 30 per cent). Since we do not cover the stock, we rely on consensus forecasts to embed AMTD’s earnings contribution in our TD model. The simple math is as follows, for every 10 per cent reduction to AMTD’s forecasts, TD’s forecasts decline by 1 per cent. This figure translates to roughly $0.07 of EPS, or a $0.75 negative impact to its stock price based on TD’s trading range in recent weeks (i.e., of 10.5 times 2020 estimates). This level of downside is not dramatic; however, it does compound existing growth headwinds in the U.S., namely the downward trajectory of P&C segment margins."
Brookfield Asset Management Inc. (BAM.A-T) was down 2.4 per cent despite receiving an upgrade from Moody’s Investors Service to Baa1 from Baa2, following its acquisition of a 61.2-per-cent of the equity of Oaktree Capital Group.
“The upgrade of Brookfield’s ratings reflects the positive effects the Oaktree acquisition is expected to have on the company’s business profile. This includes its diversification into new alternative asset classes, increased scale of revenues and assets under management, and the synergistic marketing benefits of partnering with one of the leading fixed income managers in the world,” said Moody’s.
On Monday, Brookfield Business Partners LP, a spinoff from Brookfield Asset Management, said it will pay $1.3-billion for a 45-per-cent stake in industrial services company BrandSafway from private equity firm Clayton, Dubilier & Rice (CD&R).
See also: Which Brookfield should you own? Here’s a simple solution
Fire & Flower Inc. (FAF-T) lost 2.5 per cent after reporting second-quarter results before the bell that largely met the Street’s expectations and reiterating its plan to open 55 stores by the end of the first quarter of 2020 and 95 stores by the same period in 2021.
AltaCorp Capital analyst David Kideckel said: “We view the results as broadly in line with our expectations, as the Company continues to make significant progress in executing its strategic milestones related to its retail stores expansion plan.”
Shares of McDonald’s Corp. (MCD-N) fell almost 3 per cent after JP Morgan said the fast food chain’s third-quarter same-store sales would be softer than it initially thought.
Analyst John Ivankoe thinks results will continue to show negative same-store-sales traffic “despite what is otherwise solid underlying fundamentals."
He reduced his Q3 comparable same-store sales growth expectation from up 6 per cent to up 5 percent. Consensus is 5.5 per cent.
Ford Motor Co. (F-N) fell 2.8 per cent after it announced it is forming a joint venture company with Mahindra & Mahindra in India valued at US$275-million that will develop, market and distribute Ford branded vehicles in the country, the two companies said on Tuesday.
The two companies have for months been negotiating the deal, which will see Ford hold a 49% stake in the new entity, while Indian rival Mahindra will own 51 per cent, Reuters reported in April.
By shifting to a joint venture, Ford is changing its India strategy where it has long run an independent operation. India’s autos market is dominated by Asian automakers like Suzuki Motor Corp and Hyundai Motor Co.
See also: Ford makes big electric push in Europe with new vehicle launches
With files from Terry Weber, staff and wires
David Leeder