A roundup of some of the North American equities making moves in both directions today
On the rise
Recipe Unlimited Corp. (RECP-T) was up 2.1 per cent on Wednesday after announcing its Board of Directors has authorized a substantial issuer bid to purchase for cancellation subordinate voting shares of the Company for an aggregate price not exceeding $125-million.
“Recipe believes that the purchase of Shares is in the best interest of the Company and its shareholders and permits Recipe to return up to $125 million of capital to shareholders who elect to tender their Shares,” the company said. "After giving effect to the Offer, Recipe will continue to have sufficient financial resources and working capital to conduct its ongoing business and operations and the Offer is not expected to preclude Recipe from pursuing its foreseeable business opportunities or the future growth of Recipe’s business.
The grocery store operator reported sales and adjusted earnings per share of $5.229-billion and 90 cents, both the consensus projections on the Street ($5.28-billion and 92 cents).
Waterloo Brewing Ltd. (WBR-T) rose 1.9 per cent after announcing before the bell receipt of its research license for cannabis-infused beverages. The company said it is on track to be commercially produce such products for 2020.
“The cannabis market has garnered a great deal of investor interest and after an in-depth review of our strategic options, the Company is positioning itself to be a major producer of CIB’s and to take full advantage of this new and developing beverage category,” said Waterloo president and CEO George Croft. “We plan to be the production partner of choice for the beverage cannabis business.”
On the decline
Tilray Inc. (TLRY-Q) was down 15 per cent in New York after it reported a bigger quarterly loss on Tuesday, as it ramped up investments to boost production in an attempt to grab a larger share of the nascent cannabis market and expand internationally.
Cowen analyst Vivien Azer, who raised her revenue estimates but cuts her profit projections based on the rising costs stemming from investments, said: " “While TLRY didn’t realize any sales from Portugal in Q2, the company looks well positioned to start supplying markets outside of Canada from Portugal in H2 2019.”
The luxury apparel maker reported revenue grew 59.1 per cent to $71.1-million, topping the consensus expectation on the Street of $54.4-million. An adjusted earnings per share loss of 21 cents was 3 cents better than anticipated.
However, the company posted gross profit margins of 57.5 per cent, which fell short of the consensus view of 61.6 per cent.
The loyalty rewards company says the profit amounted to 29 cents per share for the quarter ended June 30, compared with a profit of $11.1-million or four cents per share a year ago.
The Calgary-based company also announced that it intends to offer to sell common shares in an underwritten public offering. It did not release details on size and pricing.
It intends to use net proceeds of offering for research and development activities.
The company reported adjusted EBITDA of $121-million, falling below the Street's estimate of $126-million.
Noting its development projects are “progressing well,” Raymond James analyst David Quezada said: “Representing a key element of our thesis on INE we note the company has increased EBITDA/share by 26 per cent since the end of 2016 as capacity has grown significantly. Despite this, INE’s share price has been range bound since 2016 highs and not reflected in the significant value created. We attribute this lack of share price response to investor skepticism as to whether or not renewable power producers are consistently earning results materially exceeding their cost of capital. However, as we highlighted in our July 19 comment ... we believe returns on wind projects INE is pursuing in the U.S. and France earn strong returns well in excess of cost of capital (we estimate the spread at roughly 500 bps depending on the project). Meanwhile, although INE’s solar projects may sport lower returns, we see diversification benefits and INE’s relatively low cost of capital as making these projects an attractive risk-reward proposition.”
CAE Inc. (CAE-T) lost 4.6 per cent after its quarterly results fell short of analysts’ profit expectations on Wednesday, as the world’s largest civil aviation training company was hit by higher expenses that offset demand for commercial pilot training and simulators.
Cost of sales rose 15.6 per cent, while finance expenses more than doubled. The company’s selling, general and administrative expenses jumped 10 per cent to $113.3-million.
Desjardins Securities analyst Benoit Poirier said: “Bottom line, we see this morning’s pressure on the stock as justified in light of these weaker-than-expected results and CAE’s premium valuation (trading at a 1.1 times EV/FY2 EBITDA premium vs its leading defence peers (LMT, LLL, NOC, COL, RTN)).”
Macy’s Inc. (M-N) dropped 13.2 per cent after it reported a 48-per-cent fall in quarterly profit and cut its forecast for full-year adjusted earnings on Wednesday, as the department store operator discounted heavily to clear excess inventory.
Net income attributable to Macy’s shareholders fell to US$86-million, or 28 US cents per share, in the second quarter ended Aug. 3, from US$166-million, or 53 US cents per share, a year earlier.
The company now expects 2019 adjusted profit to be between US$2.85 per share to US$3.05 per share, from a previous guidance of US$3.05 to US$3.25.
CEO Heather Reisman says in a statement that the company continues to face many of the same headwinds from last year, but remains confident in the steps it is taking to improve results.
With files from staff and wires