A roundup of some of the North American equities making moves in both directions today
On the rise
The Vancouver-based Caterpillar dealer reported earnings per share of 54 cents, exceeding the expectation on the Street by 12 cents.
National Bank Financial analyst Maxim Sytchev said: “With low expectations amid trade tensions (and sliding stock price heading into the quarter), [it was a] good showing as Latam execution issues are behind us. Outlook language is more constructive on topline for H2/19E while Chilean ERP-inflicted Q1/19 weakness appears to be ironed out.”
The Calgary-based company reported adjusted EBITDA for the second quarter of $109-million, exceeding the expectation on the Street of $85-million.
At the same time, Gibson raised its full-year capex guidance by 15 per cent (to $230-$280-million from $200-$250-million) due largely to work at its Hardisty terminal.
Raymond James analyst Chris Cox said: “Headline results were a sizeable beat, driven by a stellar quarter from the company’s Marketing segment. With Marketing driving the beat, we expect a more muted share price reaction to the quarter while the upward guidance revision to capex should not come as a big surprise given the previously sanctioned expansions. We take a positive view of the move to advance certain civil work to take advantage of synergies with the existing capital projects and to shorten the construction timeline on the next phase of Hardisty expansions.”
Stingray Group Inc. (RAY.A-T; RAY.B-T) jumped 10.6 per cent after it reported revenues for its first quarter ended June 30 increased 133.4 per cent to $80.4-million versus a year ago, which was in line with expectations.
Desjardins Securities analyst Maher Yaghi said: “RAY reported strong 1Q FY20 profitability and cash production. As expected, it increased its quarterly dividend to 7 cents per share, up 17 per cent year-over-year and 8 per cent quarter-over-quarter. Moreover, the company approved an NCIB program — subject to TSX approval — for a maximum of 2.9 million shares, representing 5 per cent of outstanding subordinate shares. The company stated this program is ‘an appropriate use of its funds and a desirable investment.’
“We acknowledge the stock is currently cheap and understand the reasoning behind management’s decision to undertake an NCIB. However, we would like to see RAY continue to reduce its indebtedness rather than buying back stock, as we expect M&A to remain a central theme for the company. It would also reduce perceived risk in the company in the event of a recession, which could impact advertising revenue in radio and to the soon-to-be-launched ad-supported music platforms.”
In a research note, Raymond James analyst Chris Cox said: “While some may characterize this as a low-quality beat, with Marketing driving substantially all of the variance, we note that the strong results being realized at AEF should bode well for the company’s go-forward funding outlook; as we have seen with some of the company’s peers, stellar results from a Marketing segment during a heavy build period can meaningfully de-risk the funding profile and have an otherwise outsized impact on the equity. Reinforcing Management confidence in the funding plan was a 7-per-cent bump in the dividend, although admittedly this is consistent with our own expectations.”
Beyond Meat Inc. (BYND-Q) sat 3.6 per cent higher after Subway Restaurants said it will begin testing the plant-based food company’s meatballs in 685 restaurants across the United States and Canada starting next month.
Subway said it would use the plant-based meatballs in its trademark ‘Meatball Marinara sub’ at the restaurants for a limited period.
SNC-Lavalin Group Inc. (SNC-T) increased 6.1 per cent after announcing that it will be proceeding with closing the sale of the 10.01-per-cent stake in 407 International Inc. with Canada Pension Plan Investment Board.
On the decline
The alternative lender reported adjusted earnings per share of 58 cents, up 57 per cent from the same period a year ago (a 37-cent profit) and exceeding the expectation on the Street of 52 cents.
Saying “things are clearly back on track,” Raymond James analyst Brenna Phelan said: “Overall, we view this as a very strong result that should serve to sustain recent positive momentum in the stock.”
Inter Pipeline Ltd. (IPL-T) dipped 0.6 per cent after announcing early Wednesday it has received commercial support for the construction of a $100-million pipeline connection between its Bow River and Central Alberta pipeline systems
AltaCorp Capital analyst Nate Heywood said: “We expect the announcement to be viewed positively as the pipeline further enhances the Company’s service offering to the growing Viking and Mannville formation while providing increased optionality along the Conventional Pipeline system with market access to Edmonton.”
Shares of Bonavista Energy Corp. (BNP-T) were 6.1 per cent lower after Halifax-based G2S2 Capital Inc. announced it has acquired ownership 11.44 per cent (or 29,449,300) of Bonavista’s outstanding common shares.
CannTrust Holdings Inc. (TRST-T) stock was lower by 0.3 per cent following a report in Wednesday’s The Globe and Mail that CannTrust’s former chief executive officer warned in a letter to the chairman of the board in December, 2018, that corporate governance problems and second-guessing from board members were undermining his authority.
The letter from then-CEO Peter Aceto to then-chairman Eric Paul, dated Dec. 31, 2018, was sent at a time the company was growing thousands of cannabis plants in unlicensed rooms.
Before the bell, the Montreal-based manufacturer of pressure treated wood products reported sales and earnings per share of $661.8-million and 76 cents, respectively. Both fell short of the consensus estimates of $684.9-million and 81 cents.
Desjardins Securities analyst Benoit Poirier said: “We expect a mixed reaction as we believe the soft 2Q results might more than offset the reiterated 2019 guidance. We are not concerned by these results as they were impacted by temporary shipment delays in railway ties and wet weather conditions in residential lumber. We would therefore recommend investors take advantage of any softness in the stock price this morning to buy the shares, as we continue to like SJ for its exposure to a defensive industry (90 per cent of demand is for railway ties and utility poles, which offer defensive characteristics), attractive valuation (currently trading at 10.2 times EV/FY2 EBITDA, well below its five-year average of 12.5 times) and robust growth prospects (both organically and on the M&A front).”
After the bell on Tuesday, the Calgary-based environmental services company reported revenue and adjusted EBITDA of $161-million and $39-million, respectively. Both missed projections on the Street ($166-million and $43-million).
Industrial Alliance Securities analyst Elias Foscolos said: “BAD’s Q2/19 results fell short of [Industrial Alliance] estimates and consensus, primarily due to abnormal levels of precipitation in some of BAD’s key U.S. areas of operation. Lower-than-expected revenue, particularly in the US, and low truck utilization resulted in the EBITDA miss relative to our forecast and consensus. Truck builds substantially increased from the prior quarter, and at this rate are on pace to hit the low end of guidance. BAD’s 2019 EBITDA guidance is being maintained at $170-190-million. We believe that the market will have a modestly negative reaction to the results today, as the issues may be interpreted as temporary.”
Pollard Banknote Ltd (PBL-T) was down 5.2 per cent after it reported second-quarter sales of $97.1-million compared to $86.8-million for the same time last year. Net income was $5-million or 20 cents per share, which was consistent with the same period a year ago. Analysts were expecting revenue of $96.7-million and earnings of 23 cents.
Canaccord Genuity’s Robert Young said: “Pollard resumed its steady top line growth trajectory in Q2. Revenue grew 11.9 per cent year-over-year to $97.1-million, ahead of consensus $96.8-million, benefitting from organic growth and recent acquisitions. Importantly, the company has pushed past timing and accounting snags that occurred in the latter half of 2018 and is poised for a seasonally strong Q3 due to holiday sell-in. A heightened operating expense profile is a notable negative, even after normalizing for one-off items, causing a miss on EBITDA. With that said, we believe there is no change in the fundamental business supported by a positive outlook from management.”
The company announced it would offer a $13-per-month bundle of its three streaming services starting in November, a move to attract audiences who have embraced digital services such as Netflix Inc.
Credit Suisse analyst Douglas Mitchelson said: “The key question coming out of F3Q is whether it is realistic that Fox can still be accretive to FY21 after such a big miss to start – in our view, forecasts might moderate, but investors will give Disney much greater leeway than normal as management has built up credibility with prior M&A execution. Further, we expect that investors who are excited about the Company’s transition to streaming and the upcoming Disney+ launch are unlikely to be shaken loose by even an estimate cut of this magnitude, and even though this cut was related to Disney’s traditional businesses (prior cuts were due to digital investments).”
Shares of Netflix Inc. (NFLX-Q) were down 3.1 per cent.
FedEx Corp. (FDX-N) slid 0.3 per cent after confirming Wednesday it would terminate its contract with Amazon.com Inc for small-package ground deliveries, as the online retailer focuses on building out its own delivery network.
“This change is consistent with our strategy to focus on the broader e-commerce market,” FedEx said in a statement.
With files from staff and wires