A roundup of some of the North American equities making moves in both directions today
On the rise
WestJet Airlines Ltd. (WJA-T) rose 1.1 per cent on Tuesday after its first-quarter profit exceeding the Street’s expectation, due in large part to a rise in passenger volume to the United States and other international destinations.
The company said net profit rose to $45.6-million, or 40 cents per share, in the quarter, from $34.2-million, or 30 cents per share, a year earlier.
Analysts on average had projected a profit of 30 cents per share.
“We remain confident in our strategic direction and continue to see positive trends as a result of our prudent growth and the strategic initiatives we are undertaking.” said oresident and CEO Ed Sims in a statement. “I want to thank all of our guests for their continued loyalty and all WestJetters for their on-going commitment to providing an award-winning service through a busy first quarter.”
The Toronto-based REIT announced Tuesday morning that it earned $194.5 million or 64 cents per diluted unit in its latest quarter, up from $137.2 million or 43 cents per diluted unit in the same quarter last year. Revenue totaled $324.1-million, up from $290.1-million.
“RioCan’s industry-leading major market portfolio, leadership team, balance sheet, and development pipeline continued to deliver unitholder value in the first quarter of 2019. Our strategy to increase our presence in highly desirable, fast-growing markets will fuel FFO per unit growth long into the future,” said CEO Edward Sonshine in a statement.
Alaris Royalty Corp. (AD-T) increased 2.3 per cent following first-quarter results that largely fell in line with expectations.
The Calgary-based company announced revenue of $27.7-million for the quarter, rising from $23.6-million during the same period a year ago. Net income was $3.6-million or 31 cents per share compared to a loss of $3.1-million or 9 cents a year ago.
Raymond James analyst Brenna Phelan said: “When Alaris’ AIF included disclosure that the distribution from Providence Industries had been blocked by its senior lender, investor focus returned to potential downside risks from this suspended distribution and to the potential consequences of the pressured ECRs of other large investments turning into something worse. In 1Q19 results, Alaris disclosed that it has reached an agreement with Providence’s lenders under which it will receive a partial distribution, while taking a US$5-million fair value charge on the investment. Meanwhile, BCC’s ECR deteriorated further in the quarter, reinforcing the risk associated with BCC reaching the targets required for Alaris’ further committed contributions of US$45-million, which we model in 2020. On balance though, with a 2-per-cent higher EBITDA forecast and most other investment ECRs trending well, we are modestly more positive.”
The retailer reported revenue for the quarter of $149.3-million, up 10.4 per cent from $135.3-million a year ago but below the consensus analyst forecast of $155-million. Adjusted earnings per share of 23 cents fell below the 29-cent forecast,
Raymond James analyst Kenric Tyghe said: “The results reflected both weaker than expected SSS (driving a top line miss), and the negative impact of the adoption of IFRS 16 (which was not reflected in consensus numbers). Concurrent with the release, Sleep Country announced a 5.4-per-cent increase in the quarterly dividend to $0.195 per share. While Endy’s performance was strong, the SSS decrease of a disappointing 3.4 per cent (on a very tough prior year 5.1-per-cent SSS increase), will in our opinion take centre stage for investors. According to management, while SSS performance was weak in the first two months of the quarter (due to poor weather at the start of the year), the metric improved markedly in March, which is incrementally positive (and coincides with a step up in consumer confidence in March, in part due to expectations that recent macro data would put rate hikes on hold). The quantum of growth achieved by Endy (in a tough market) did however come at a a price, with higher than expected G&A costs (on elevated marketing and advertising costs supporting both Endy and the All for Sleep campaign), driving the market share gains.”
“Maple Leaf Foods Inc. announced in November 2018 that it will be closing its Toronto facility by 2021,” the union said. “In light of the company’s decision to close, workers’ main priority is to achieve fair severance and closure language. The approximately 680 workers who process poultry at the facility have struggled to get a fair deal since it expired September 23, 2018.”
On the decline
The Calgary-based railway announced Monday the payout will increase to 83 cents from 65 cents and will be payable July 29 to shareholders of record June 28.
“This significant dividend increase represents not only our outstanding performance as a company, but our commitment to creating long-term value for our shareholders,” said CP president and CEO Keith Creel in a press release. “CP remains well-positioned for sustainable, profitable growth and providing balanced shareholder returns is an important part of our success. This is the fourth straight year CP has increased the quarterly dividend, representing a 137 percent increase since 2014. In this time, CP has paid $1.47 billion in dividends and returned $9.2 billion to shareholders.”
MEG Energy Corp. (MEG-T) was down 2.9 per cent despite its first-quarter results beating the Street.
After the close on Monday, the Calgary-based company reported cash flow per share of 50 cents, topping the consensus expectation by 4 cents and jumping from a fourth-quarter loss of 13 cents. Production of 87,1000 barrels per day fell just below the analysts’ estimate (86,600 barrels per day)
Raymond James analyst Chris Cox said: “With the company generating a significant $98-million of free cash flow during the quarter, we suspect investor attention will likely focus on commentary from Management that it sees net debt to EBITDA falling below 3.0 times by year-end at strip pricing. While we have a more cautious outlook with respect to heavy oil differentials heading into 2020, the step-up in the company’s pipeline commitments to the USGC by mid-2020 should help offset a significant portion of this headwind, providing for a still credible glide path to balance sheet de-leveraging and production growth.”
Shares of Hudbay Minerals Inc. (HBM-T) was down 11.4 per cent after its first-quarter financial results fell short of expectations.
The Toronto-based miner reported first-quarter revenue of US$292.3-million, falling from US$386.7-million a year earlier and missing analysts’ projection of US$314.7-million.
In a research note, Industrial Alliance Securities’ George Topping said: “Through the recent agreement with Waterton (Private), the AGM will confirm current management stays at the helm as per our long-standing recommended outcome. While Q1 was impacted by an inventory rebuild, the Company still has more positive news flow ahead. In particular, the exploration at Lalor (specifically the 1901 zone) as well as regional mineralisation at Constancia while Rosemont development gets underway.”
Raymond James analyst Jeremy McCrea said: "Investor sentiment has not been kind to oil-weighted names. Despite differentials improving and CDN prices above C$75/bbl recently, there remains a lack of conviction to put new money to work. Part of the feedback we’ve heard from institutional investors lately is a continuous stream of negative headline news/risks (pipeline approvals, pipeline recontracting, differentials, weather, regulation, ARO’s, etc). Unfortunately, given BNE’s size and low liquidity, and above average debt, the stock has sold off more meaningfully than larger cap names in the past year. Ironically , with the 90-per-cent dividend cut (and high oil prices), leverage and/or growth concerns should be considerably better going forward. When the market will recognize this underlying change for Bonterra is more difficult to measure however.
“The miss in Q1 production results unfortunately won’t help near-term sentiment (detailed below)however better realized commodity prices will likely alleviate any near-term weakness. For the time being, current investors should start to feel more confident that the bottom may be in given improving leverage ratio’s, that although elevated, are not unreasonable given a low decline, and a stock trading below its PDP reserve value. With April production 10 per cent higher than 1Q19, 2Q looks off to a good start.”
The miner said revenue fell 20 per cent year-over-year to US$251-million, missing the expectation on the Street of US$269.1-million.
BMO Nesbitt Burns analyst Andrew Kaip, who lowered Iamgold to “market perform” from “outperform," said: “We believe that technical issues at Westwood will persist, placing 2019 guidance at risk.”
Mylan NV (MYL-Q) plummeted 23.2 per cent after missing Wall Street estimates for quarterly revenue.
The drugmaker’s revenue from its North America business fell 6 per cent to US$922.9-million and missed the Street’s forecast of US$952.43-million, largely due to increased competition.
Total revenue fell 7 per cent to US$2.50-billion and missed estimates of US$2.69-billion.
With files from staff and wires