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

On the rise

Bank of Nova Scotia (BNS-T) rose after its first-quarter profit edged higher than its prepandemic levels as strong results from capital markets and wealth management more than offset a decline in returns from international banking.

Scotiabank also set aside lower loan loss provisions, earmarking $764-million to cover potential losses, a 17-per-cent drop from a year ago as government relief programs continue to soften the impact of the novel coronavirus pandemic.

For the three months that ended Jan. 31, the bank earned $2.4-billion, or $1.86 per share, compared with $2.33-billion, or $1.84 per share, in the same quarter last year.

Adjusted for certain items, Scotiabank said it earned $1.88 per share. On average, analysts expected the bank to report adjusted earnings of $1.53 per share, according to Refinitiv.

The bank kept its quarterly dividend unchanged at 90 cents per share, as Canada’s banking regulator continues to prohibit dividend increases.

- James Bradshaw

See also: Investors seek clues to how Canada’s big banks will use billions in excess capital

Bank of Montreal (BMO-T) also rose as its fiscal first quarter profit jumped 27 per cent higher, surpassing prepandemic levels with strong results from U.S. retail banking and its capital markets arm.

Canada’s fourth-largest bank boosted revenue, lowered its costs and was also helped by declining provisions for credit losses as government support programs continue to pump cash into households and businesses. Provisions fell to $156-million – a decrease of 55 per cent from the same quarter last year – after the bank built massive reserves against potential losses in the early months of the coronavirus pandemic.

For the three months that ended Jan. 31, BMO reported profit of $2-billion, or $3.03 per share, compared with $1.59-billion, or $2.37 per share, a year ago.

After adjusting for one-time items, BMO said it earned $3.06 per share, far higher than the $2.12 in adjusted earnings per share predicted by analysts, according to Refinitiv.

The bank kept its quarterly dividend unchanged at $1.06 per share, in line with restrictions imposed by the country’s banking regulator.

- James Bradshaw

Thomson Reuters Corp. (TRI-T) soared after it reported higher sales and operating profits and said it would reshape its corporate structure for a post-pandemic world, closing offices, streamlining technology and relying more on artificial intelligence and machines.

The news and information group said it would invest US$500-million to US$600-million over two years to make the transition from a content provider to a content-driven technology company to serve customers increasingly working from home during the COVID-19 pandemic.

It aims to cut annual operating expenses by US$60- million through eliminating duplicate functions and consolidating technology, as well as through attrition and shrinking its real estate footprint. The cost cuts do not involve layoff programs and divestitures, the company said.

“We look at the changing behaviors as a result of COVID ... on professionals working from home working remotely being much more reliant on 24-7, digital always-on, sort of real-time always available information, served through software and powered by AI and ML (machine learning),” Chief Executive Steve Hasker said in an interview.

Sales growth is forecast to accelerate in each of the next three years compared with 1.3-per-cent reported sales growth for 2020, the company said in its earnings release.

Thomson Reuters, which owns Reuters News, said revenues rose 2 per cent to US$1.62-billion, while its operating profit jumped more than 300 per cent to US$956-million, reflecting the sale of an investment and other items.

Adjusted earnings per share of 54 US cents were ahead of the 46 US cents expected, based on data from Refinitiv.

The company raised its annual dividend by 10 US cents to US$1.62 per share.

Gibson Energy Inc. (GEI-T) rose in the wake of reporting fourth-quarter results after the bell on Monday that fell short of expectations.

Earnings before interest, taxes, depreciation and amortization of $80.4-million, fell below the Street’s consensus projection of $90-million.

However, the Calgary-based company also announced a 1-cent increase for its quarterly dividend to 35 cents per share.

On Tuesday, Gibson CEO Steve Spaulding said “clarity” about the future of the cancelled Keystone XL pipeline has prompted increased interest from potential customers in an expansion of its diluent recovery unit now under construction at the Hardisty crude transport hub in east central Alberta.

Diluent, a light oil mixed with sticky, heavy bitumen from the oilsands to allow it to flow in a pipeline, makes up as much as a third of the volume of blended bitumen or “dilbit” headed to U.S. refineries.

Gibson’s project is designed to remove the diluent from dilbit transported by pipeline to Hardisty, allowing transfer of the concentrated heavy crude to railcars for shipping south, while the diluent can be recycled to Alberta oilsands producers.

Mr. Spaulding says the first 50,000-barrel-per-day phase of its project is set to be in service by the middle of this year under a 10-year contract with ConocoPhillips Canada, which owns the Surmont thermal oilsands project in northern Alberta with French partner Total S.A.

In a research note, Credit Suisse analyst Andrew Kuske said: “Against our numbers, the results delta was driven by a lower marketing figure in a challenging environment. Despite those issues, a number of clear positives exist with an economic recovery scenario, however, a timely addition along with the restoration of egress capacity will likely result in narrow diffs – both of which are likely to weigh on part of GEI’s business. Positively, GEI increased the dividend ... along with continuing the deleveraging initiatives. Given the long-cycle nature of our coverage universe, we do not place undue emphasis on short-term quarterly results.”

Andlauer Healthcare Group Inc. (AND-T) was up in reaction to the premarket announcement that it has entered into definitive agreements to acquire 100 per cent of Skelton Canada Inc. and 49 per cent of Skelton USA Inc. for total aggregate consideration of approximately $114.7-million.

The agreement also includes an option to acquire the remaining 51 per cent of Skelton USA.

Toronto-based Andlaeur said the acquisition of Skelton, which specializes in the transportation of refrigerated healthcare products, will be immediately accretive to cash flow and earnings per share.

Macy’s (M-N) fourth-quarter profit plunged 52 per cent and sales slid nearly 19 per cent. In the context of a year spent under the weight of a pandemic, that was seen as a pretty good ending to 2020 for the besieged department store.

Shares rose with Macy’s predicting sales of up to US$20.75-billion this year, far exceeding the roughly US$17-billion that Wall Street had been projecting. Macy’s also expects adjusted earnings per share in the range of 40 US cents to 90 US cents for the year, much better than the US$2.92 loss that analysts forecast, according to FactSet.

“Macy’s, Inc. anticipates 2021 as a recovery and rebuilding year as the company sets a foundation for growth, " the department store said in its release.

For the final fiscal quarter of the year that ended Jan. 30, Macy’s reported profits of US$160-million, or 50 US cents a share. It was 80 US cents per share if one-time costs are considered, and that was also far better than the per-share forecasts of 11 US cents from industry analysts, according to a survey by FactSet.

It’s still well below US$340-million, or US$1.09 per share, for the same period in 2019, the last before COVID-19 emptied retail stores nationwide. Since then, the New York company furloughed a majority of its employees. It began reopening stores in May, but the recovery has been painfully slow.

On the decline

Shopify Inc. (SHOP-T) dropped after announcing it is set to sell US$1.55-billion-plus worth of stock, taking advantage of its soaring stock price and strong fourth-quarter earnings report last week to raise a 10-figure sum from investors in less than a year.

Canada’s most valuable publicly traded company said after the close of markets Monday it plans to sell 1.18-million subordinate voting shares in an offering led by Citigroup, Credit Suisse and Goldman Sachs & Co. It priced the offering early Wednesday at US$1,315 per share – a 4.8 per cent discount to its closing price Monday. Total proceeds could rise by another US$233-million if the underwriters exercise their option to buy stock at the offering price.

No Canadian banks were listed in the release, although Shopify - which now lists its home as “the Internet” instead of its domicile in Ottawa as it plans to continue operating remotely after the pandemic – sometimes adds a Canadian dealer to its underwriting syndicates in a secondary role.

- Sean Silcoff

See also: After blistering 2020, Shopify warns of softer year ahead, stops giving forward guidance

Score Media and Gaming Inc. (SCR-T) was lower following the announcement after the bell on Monday of the launch of a marketed public offering of 5 million Class A subordinate voting shares in the United States and Canada, representing its initial public offering in the United States.

TheScore has filed an application to list the Class A Shares on the Nasdaq under the symbol “SCR” with trading expected to commence following pricing of the offering.

Northland Power Inc. (NPI-T) declined on the post-market release of weaker-than-anticipated quarterly results on Monday.

The Toronto-based company reported adjusted EBITDA of $269-million, falling short of the Street’s projection of $290-million as its Offsore Wind segment declined 7 per cent year-over-year.

Raymond James analyst David Quezada said: “Our constructive stance on NPI rests on the company’s ambitious efforts in building out an enviable portfolio of offshore wind development assets. This supports the potential addition of 4-5 GW over the next 5 years - sufficient to double EBITDA over this period. We believe this represents the most attractive long term growth trajectory among the IPPs we cover.”

Shares of Just Energy Group Inc. (JE-T) continued to fall after it said on Tuesday its storm-battered residential customers in Texas will be protected from higher energy rates for February, a day after the Canadian company raised doubts about its ability to continue as a going concern.

The electricity and gas provider, however, said the total energy cost for the month of February may be impacted by higher usage because of the winter storms sweeping across Texas.

Electricity prices in the state soared last week as utilities scrambled to meet a surge in heating demand during the historic winter storm.

On Monday, Just Energy, whose units Amigo Energy and Tara Energy also operate in Texas, forecast a US$250-million loss from the storms and said it was talking with key stakeholders to address liquidity issues.

Customers with residential fixed rate plan, and month-to-month residential customers will not see a rate increase on their February bill, the company said in a statement.

Governor Greg Abbott said on Sunday utility regulators will temporarily ban power companies from billing customers or disconnecting them for non-payment, after the deadly winter storm that caused widespread blackouts.

See also: Tuesday’s analyst upgrades and downgrades

Shares in Tesla Inc. (TSLA-Q) plunged into the red for the year on Tuesday, hit by a broad selloff of high-flying technology stocks and the fall of bitcoin, in which the electric carmaker recently invested US$1.5-billion.

The firm led by Elon Musk has had a stellar ride since 2020, which it began at about US$85 per share, before reaching the US$900 mark on Jan. 25.

Bitcoin has also swung into a bear market, falling from a peak of $58,354 on Feb. 21 to a low of $45,000 earlier on Tuesday.

A Germany-based trader said he was “taking chips off the table” on Tesla as its US$1.5-billion investment in the cryptocurrency could “backfire now”.

Among the factors contributing to the rise of the stocks is surging retail and institutional demand for “environmental, social, and governance” (ESG) friendly investments.

“There is a lot of reasons – purely from a sustainability angle – to hold Tesla, it is part of that transformation towards a more sustainable business model,” Valentijn van Nieuwenhuijzen, chief investment officer at asset manager NN IP told Reuters on Friday.

See also: McGugan: Crash or no crash, stock markets are too exuberant for comfort

Tesla competitor Nikola Corp. (NKLA-Q) also slid after it disclosed details on its hydrogen fuel-cell-powered product lineup that will include vehicles with a driving range of up to 900 miles.

The lineup includes a hydrogen fuel-cell electric vehicle (FCEV) variant of Nikola’s truck series Tre Cabover and Nikola Two FCEV Sleeper, a long-haul freight automobile, for the North American market.

The company’s Tre battery-electric vehicle (BEV) variant currently covers up to 300 miles.

The first Tre FCEV prototype building is set to begin in the second quarter, with testing and validation continuing into 2022, the company said, adding that production is planned to start in the second half of 2023.

Nikola said its Tre FCEV Cabover is targeted for distances up to 500 miles, while the Sleeper would allow for a non-stop range of up to 900 miles.

Home Depot Inc. (HD-N) fell in the wake of warning Tuesday that it could not predict if its pandemic-induced sales dream run from last year will continue into 2021, even as its quarterly results handily beat analysts’ estimates.

Stuck-at-home Americans have been snapping up tools, paint and building materials all through the COVID-19 health crisis, but the roll out of vaccines and the hopes for a normal life have led many to believe that demand in 2021 will fade.

“We are not able to predict how consumer spending will evolve,” Home Depot Chief Financial Officer Richard McPhail said.

But if the demand environment during the back half of fiscal 2020 were to persist through the current year, it would imply flat to slightly positive comparable sales growth, Mr. McPhail said.

Smaller competitor Lowe’s Cos Inc. (LOW-N) in December said a “robust” 2021 scenario for the home improvement market would likely be a 5-per-cent to 7 -per-cent decline in demand.

Home Depot’s shares fell, even after it reported a 24.5-per-cent jump in fourth quarter same-store sales, beating analysts’ average estimate of an 18.9-per-cent increase, according to IBES data from Refinitiv.

Overall net sales rose 25.1 per cent to US$32.3-billion, beating estimates of US$30.73-billion. The company earned US$2.65 per share, while analysts had expected a profit of US$2.62 per share.

Houston-based Occidental Petroleum Corp. (OXY-N) dropped after it posted a larger-than-expected fourth-quarter loss despite higher oil and gas prices as an asset sale weighed on results.

The U.S. producer has slashed jobs and output after the coronavirus pandemic hammered global energy demand, pressuring an energy company that had loaded up on debt in 2019 to acquire an oil rival. Its fourth-quarter loss widened to US$731-million compared with a US$269-million loss in the same quarter a year ago.

The adjusted per-share loss of 78 US cents was higher than analyst expectations for a 59-US-cent loss, according to IBES data on Refinitiv. For the same quarter last year, the company reported a per-share loss of 30 US cents.

“We remain committed to strengthening our balance sheet and transitioned into 2021 with an improved financial position by achieving our 2020 divestiture target, reducing debt and successfully extending debt maturities,” said Chief Executive Vicki Hollub.

Palo Alto Networks Inc. (PANW-N) slipped despite releasing better-than-expected results after the bell on Monday.

The cybersecurity firm reported revenue and earnings per share of US$1.02-billion and US$1.55, respectively, topping the Street’s estimates of US$986-million and US$1.43.

In a research note released before the bell, BMO Nesbitt Burns analyst Keith Bachman upgraded his rating for Palo Alto shares to “outperform” from a “market perform” recommendation.

“We believe that PANW is well positioned with its security portfolio, and customer requirements continue to evolve and become more complicated, providing PANW with share gain opportunities,” he said.

“Further, as interest rates move higher, we believe that a handful of companies such as PANW deserve incremental positive consideration.”

With files from staff and wires

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