A roundup of some of the North American equities making moves in both directions today
On the rise
Nike Inc. (NKE-N) was up 4.1 per cent on Wednesday after reporting quarterly revenue and profit after the bell on Tuesday that blew past Wall Street expectations.
Net income rose to $1.37 billion, or 86 cents per share, from $1.09 billion, or 67 cents per share, a year earlier. Revenue rose 7.2 per cent to $10.66 billion.
Analysts were expecting Nike to earn 70 cents per share and revenue of $10.44 billion.
Credit Suisse analyst Michael Binetti said: “Nike delivered a very high quality F1Q EPS beat (with upside from revs & GM), guided relatively in-line with Consensus for F2Q EPS (vs historically guiding significantly below the forward quarter), and maintained FY20 guidance, but with several sources of upside in our view. We continue to be impressed by Nike’s ongoing global brand momentum, fueled by outperformance from international/digital/scaling innovation platforms. North America revs were slightly below our model in F1Q, but Nike noted more forcefully than usual that trends should accelerate through the year (and trends accelerated into Back to School late in the quarter). Importantly, in a tough macro, we think Nike is one of a few companies that can confidently point to an acceleration in near-term rev trends (in F2Q, Nike’s guide implies similar organic revenue trends to F1Q, despite compares that are 5 percentage points tougher). While the big F1Q GM beat had some timing impacts, we think the bigger driver was international/DTC mix—which should continue to support better GMs through the year vs our prior model (despite a big headwind from the abrupt implementation of tariffs that will hit 2Q, & we note Nike will be better armed to mitigate tariffs in F2H). Lastly, our hunch remains that SG&A could finally start to leverage in 2H—on a path back to Nike’s 2017 Analyst Day guide (which implies some much bigger SG&A leverage years in FY21/beyond). We think the combination of accelerating global rev trends and better margin flow-through will translate to accelerating EPS upside through FY20”
Shares of Philip Morris International Inc. (PM-N) rose 5.2 per cent and Altria Group Inc. (MO-N) fell 0.4 per cent after the two announced on Wednesday they have abandoned merger talks as Altria-backed e-cigarette maker Juul Labs sank deeper into crisis and said it would suspend advertising in the United States.
The abandonment of the talks, announced on Wednesday, comes at a time when e-cigarettes and vaping are facing intense regulatory and health scrutiny. Juul, in which Altria has a 35-per-cent stake, faces a U.S. ban on some products and said its CEO Kevin Burns was stepping down, and that it would suspend all broadcast, print and digital advertising in the United States.
Philip Morris and Altria, announcing the end of their talks, said they would instead focus on the joint launch of tobacco-heating product iQOS in the United States.
Enbridge Inc. (ENB-T) was up 0.04 per cent after saying on Tuesday it had received a permit from the U.S. Army Corps of Engineers to install 54 steel supports along its underwater Line 5 pipeline in Michigan’s Straits of Mackinac.
Line 5 ships 540,000 barrels per day of light crude oil and propane and is a critical part of Enbridge’s Mainline network, which delivers the bulk of Canadian crude exports to the United States.
"Following a thorough review of our organizational capabilities, we are streamlining our management team," the company stated. It said chief operating officer Jason Jaskela and vice president exploration Jonathan Grimwood are no longer with the corporation.
The company also said Kevin Olson has stepped down from the board of directors “to concentrate on his other business ventures.”
Laurentian Bank Securities analyst Todd Kepler said: “While the management streamlining is presented as a cost-cutting initiative, we believe the market will question the decision to collapse the roles of COO and VP Ex in a 100,000 boe/d E&P company (spreading too thin?). Now with Neil Roszell in the Chairman’s seat remaining as the sole surviving Raging River (RRX) executive on BTE’s board/management team, we suspect that speculation will begin on a potential reunion of the RRX team in a new venture.”
Marathon Petroleum Corp. (MPC-N) finished 8.4 per cent higher after Elliott Management renewed its demand on Wednesday for it to split into three companies, three years after the activist investor asked the refiner to review its operations and consider spinning off businesses.
Elliott, which holds an economic interest of about 2.5 per cent in Marathon, said the renewal call was prompted by the company’s failure to deliver on its previous promises.
On the decline
Lithium Americas Corp. (LAC-T) was down 2.2 per cent after cutting its budget and production target for a proposed Nevada mine amidst growing concern of a global supply glut for the white metal, a key ingredient used to make electric vehicle batteries.
The announcement on Wednesday from the British Columbia-based company comes as lithium prices plummet in China, the world’s largest consumer of the metal, due to fears of supply exceeding demand, even as Rivian Automotive LLC, Volkswagen AG and other automakers launch ambitious EV plans.s.
AGF Management Ltd. (AGF.B-T) slipped 2.2 per cent after releasing quarterly results that exceeded expectations before the bell.) were 3 per cent lower.
The Toronto-based firm reported total assets under management of $37.4-billion for the third quarter compared to $38.8-billion in the same period in 2018.
Income for the three months ended Aug. 31 was $107.4-million, compared to $116.5-million a year ago. Expectations were for income of $106.9-million Earnings per share from continuing operations was 18 cents which was ahead of expectations of 14 cents and compared to 26 cents for the comparative period.
Following a more than 11-per-cent drop on Tuesday after the company abandoned an attempt to raise US$300-million in the bond market despite offering a 9-per-cent interest rate, in a sign of growing pessimism about the steel industry as global economic expansion slows, shares of Stelco Holdings Inc. (STLC-T) were 2.9 per cent lower.
Best Buy Co Inc. (BBY-N) slid 0.4 per cent after revealing it’s aiming to rake in revenue of US$50-billion in 2025 as it adds new products and bolsters investments as part of the second phase of its growth plan
The biggest U.S. consumer electronics retailer said on Wednesday it expects adjusted operating income to grow 5 per cent in 2025, compared with its current estimate of flat to slightly up.
“In this next chapter, our focus continues to be top-line growth,” chief financial officer Matt Bilunas said in a statement.
EBay Inc. (EBAY-Q) was down 0.8 per cent after announcing before the bell that chief executive officer Devin Wenig has stepped down and the e-commerce company named its finance head Scott Schenkel as interim CEO.
With files from Brenda Bouw, staff and wires