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

On the rise

Stelco Holdings Inc. (STLC-T) soared after it saw a significant jump in earnings in the second quarter as it benefitted from higher steel prices and shipping volumes.

The Hamilton-based company, which wholly owns Stelco Inc., says earnings for the second quarter came in at $363-million, or $4.09 per share, up from nil earnings in the same quarter last year.

Adjusted net income for the quarter ending June 30 was $380-million, or $4.28 per share, up from earnings of $10-million or 11 cents per share last year.

Revenue came in at $918-million, up from $411-million for the same quarter last year.

Analysts on average expected Stelco to report adjusted net income of $338-million, or $4.14 per share, and revenue of $906-million, according to financial data firm Refinitiv.

The company says its average selling price for steel was up 85 per cent compared with last year, and up 35 per cent from the first quarter.

With the release of stronger-than-anticipated quarterly results, shares of ATS Automation Tooling Systems Inc. (ATA-T) jumped on Wednesday.

The Cambridge, Ont.-based manufacturer reported consolidated revenue of $510.6-million, up 57 per cent year-over-year and above the Street’s forecast of $453.9-million. Adjusted earnings per share of 48 cents also easily topped the consensus estimate (32 cents).

National Bank analyst Maxim Sytchev said: “For lack of a better word, ATA’s execution has become ‘predictable’ whereby order momentum / end-market positioning powers strong backlog additions that translate into regular beats. While this of course remains a project-driven business, the lesser volatility has to be credited to management’s defensive posture towards end markets (i.e., focus on the ones that provide predictable growth). We believe investors can continue ripping the benefits of this trend as Healthcare spending post-COVID, EV CAPEX acceleration, nuclear refurb work are all long-horizon themes. While ATA’s multiple expansion has commenced (standing at 14.9 times F2023, up from 11-12-times range last year), it is still lagging vs. the broader peer group while prospects for further upward earnings growth sustain an upward share trajectory.”

WSP Global Inc. (WSP-T) rose on the late Tuesday release of better-than-anticipated second-quarter results.

The Montreal-based engineering consulting firm reported revenue of $2.029-billion and adjusted earnings per share of $1.26, both exceeding the Street’s projections ($1.979-billion and $1.13, respectively) as organic growth jumped 3.6 per cent.

“We simply cannot recall the last time WSP results deviated meaningfully from our expectations,” said Laurentian Bank Securities analyst Troy Sun. “Meanwhile, investors have been rewarded, by the consistent performance, with an impressive share price performance (the stock has appreciated by 245 per cent since August 2016, dwarfing the TSX’s gains at 39 per cent over the same period). The stock is trading at 16.3 times 2022 estimated EV/EBITDA; not cheap, but we are getting the sense investors are positioning for another accretive acquisition. With the balance sheet sitting in an under-levered position (and prospective FCF generation to the tune of $550-million per annum in the next two years), we have every reason to believe the company will keep advancing its capital deployment strategy.”

Tracking gold prices, Centerra Gold Inc. (CG-T) was higher after Kyrgyzstan’s state security service and prosecutors said on Wednesday it has established enough evidence to press on with removing the Canadian miner from the Kumtor gold mine.

The security service is investigating possible corruption in the deal that gave Centerra control over the country’s biggest gold mine and subsequent amendments to the pact.

It said on Wednesday it has established enough facts to press ahead with annulling the deal.

A spokesperson for Centerra referred Reuters to prior statements in which the company described the seizure of the mine as unjustified and illegal and dismissed the Kyrgyz allegations as false.

Centerra Gold this week said it had recognised a $926-million loss on the change of control and included the Kumtor Mine in its discontinued operations.

The government seized control over Kumtor in May in a move challenged by Centerra Gold through international arbitration.

“While we continue to pursue all measures necessary to protect the company’s rights related to the Kumtor mine, in arbitration and in other legal proceedings, the company has consistently stated that it remains willing and available to engage with the Kyrgyz government in a constructive dialogue on the matters it considers to be the subject of dispute,” the spokesperson said

National Bank of Canada (NA-T) was narrowly higher in the wake of saying chief executive Louis Vachon will retire at the end of October after nearly 15 years in the job.

The Montreal-based bank says chief operating officer Laurent Ferreira will replace him in the top post.

Mr. Vachon has been CEO since June 2007 and also served as chief operating officer before heading the bank.

Mr. Ferreira joined National Bank in 1998.

Before he became chief operating officer in February, Mr. Ferreira was executive vice-president and co-head, financial markets.

He will become CEO effective Nov. 1.

Southwest Airlines Co. (LUV-N) turned higher in afternoon trading after it became the first big U.S. carrier to warn of a hit from the more infectious Delta variant of the coronavirus on Wednesday, saying it may not be profitable in the current quarter.

The company said the spread of the variant had hit bookings and increased cancellations in August.

The profit warning marked a u-turn from the airline’s upbeat statement last month that it would remain profitable for the rest of 2021. It also dragged down shares of rivals Delta Air Lines Inc. (DAL-N), American Airlines Group Inc. (AAL-Q) and United Airlines (UAL-Q).

The rapid surge in cases of the variant has pushed U.S. hospitalizations to a six-month high, prompting governments in areas such as Hawaii to re-impose restrictions and threatening a recovery in travel demand.

Budget carrier Southwest had been one of the biggest beneficiaries of easing coronavirus curbs as it mainly caters to the domestic market.

The carrier on Wednesday also forecast its third-quarter operating revenue to be down 15 per cent to 20 per cent versus 2019, a cut of about three to four points from its prior outlook issued just three weeks ago.

But it maintained its unit cost outlook for the quarter.

Last week, Frontier Airlines also lowered its third-quarter forecast and warned the Delta variant was hurting demand.

Southwest shares have risen 9.7 per cent this year on hopes of a recovery in travel demand, but underperformed the benchmark S&P 500 index’s 18.1-per-cent rise.

On the decline

Metro Inc. (MRU-T) was up after saying it earned $252.4-million in its latest quarter, down from $263.5-million in the same quarter last year when shoppers stocked up at the start of the pandemic.

The grocery and drugstore retailer says the profit amounted to $1.03 per diluted share for the 16-week period ended July 3, down from $1.04 per diluted share a year ago.

Sales in what was the company’s third quarter were $5.72-billion, down from $5.84-billion last year.

COVID-19 related expenses for the quarter totalled $38-million compared with $107-million in the same quarter last year.

On an adjusted basis, Metro says it earned $1.06 per diluted share in the quarter, down from $1.08 per diluted share in the same quarter last year.

Analysts on average had expected an adjusted profit of $1.13 per diluted share for the quarter, according to financial market data firm Refinitiv.

Aviation training specialist CAE Inc. (CAE-T) was after it posted a quarterly profit compared to a loss a year earlier, benefiting from higher demand for its flight simulators as air travel rebounds from 2020 pandemic lows.

The Canadian company’s first-quarter net income stood at $47.3-million, or 16 cents per share versus a loss of $110-million, or 42 cents per share, a year earlier.

With the global aviation industry recovering and U.S. tourists returning to Canada, analysts expect pilot training demand to return to pre-pandemic levels soon.

“We expect continued strong year over year growth in fiscal year 2022, as recovery takes hold in our end markets,” Chief Executive Marc Parent said.

Canada last month said it would allow fully vaccinated U.S. tourists to enter the country from Aug. 9, after an unprecedented 16-month ban that was imposed to curb the spread of the COVID-19 pandemic.

Montreal-based CAE said deliveries of full-flight simulators rose to 11 units in the first quarter, up from 2 units a year earlier.

Auto parts manufacturer Martinrea International Inc. (MRE-T) fell despite saying it has a positive long-term outlook as it improved sales and earnings in its second quarter, even as semiconductor supply issues disrupt the auto industry.

The Vaughan, Ont.-based company reported a net income of $23.9-million for the quarter ended June 30, compared to a net income loss of $146.9-million in the same quarter last year.

That equates to a net earnings of 30 cents per share, compared to a net loss of $1.84 per share in the previous year.

On an adjusted basis, Martinrea’s net income was $27-million or 34 cents per share, compared to an adjusted net loss of $73.1-million or 91 cents per share last year.

The company said its margins were affected by a heavier new business launch cycle than usual this quarter, and from difficulties around labour availability in some regions.

It said it has a positive long-term outlook due to strong demand and record inventory lows for vehicles.

Canada Goose Holdings Inc. (GOOS-T) plummeted as it left its full-year revenue forecast unchanged after comfortably beating quarterly estimates on Wednesday, at a time when rising COVID-19 cases in key markets threaten to derail a nascent recovery.

Shares of the company fell as the conservative outlook contrasted with upbeat expectations from peers Ralph Lauren Corp and Michael Kors-owner Capri Holdings Ltd.

The highly infectious Delta variant of the virus has raised fears that potential new lockdowns could slam the brakes on a rebound in the global luxury goods industry from an unprecedented sales contraction last year due to the pandemic.

Some cities in China, a key market for Canada Goose and other high-end apparel makers, have already stepped up restrictions, cut flights and increased testing to control an outbreak of the variant.

However, the new restrictions has not had an impact on the company’s business in China yet, Canada Goose Chief Executive Officer Dani Reiss told Reuters, adding that the company was prepared for “whatever’s ahead.”

Canada Goose, best known for its pricey red parkas, reiterated its full-year revenue forecast of over $1-billion.

The Toronto-based said first-quarter revenue rose to $56.3-million, from $26.1-million a year earlier.

Analysts on average had expected $49.7-million, according to IBES data from Refinitiv.

Excluding items, Canada Goose reported a loss of 45 cents per share, compared with analysts’ expectations for a loss of 54 cents.

With files from staff and wires

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