A roundup of some of the North American equities making moves in both directions today
On the rise
Hexo Corp. (HEXO-T) jumped 3.5 per cent trading after revealing it has postponed its fourth-quarter earnings release while announcing a $70-million private placement of convertible debentures led by a group of investors, including its chief executive.
The Gatineau, Que.-based company says that in light of this financing and additional time needed to finalize its year-end filings, Hexo will push back its earnings release to Oct. 28 and its conference call to Oct. 29.
“The confidence in HEXO Corp that this $70 million private placement demonstrates is a testament to the value the Company is expected to bring to shareholders,” said CEO Sebastien St-Louis. “We remain focused on garnering significant market share, driving growth, and in shaping this company into a mature, resilient and valued leader in our industry.”
Boeing Co. (BA-N) was up 1.1 per cent after cutting production of its flagship Dreamliner and delaying the arrival of a successor to its 777 mini-jumbo, piling new pressures on a rejigged senior management team as the continued safety grounding of its 737 Max sliced third quarter profits.
Boeing Co reported a 53% drop in quarterly profit on Wednesday and had a negative free cash flow of $2.89 billion in the quarter, compared with a positive free cash flow of $4.10 billion a year earlier.
Core operating earnings fell to $895 million or $1.45 per share, from $1.89 billion or $3.58 per share, a year earlier.
The profit slump and trio of industrial setbacks capped a tumultuous week for the world’s largest planemaker, already in the eighth month of a deepening crisis over the grounding of its best-selling single-aisle following deadly crashes.
Industrial bellwether Caterpillar Inc. (CAT-N) was up 1.3 per cent after it fell short of Wall Street estimates for quarterly profit on Wednesday and cut its forecast for overall earnings in 2019, as it reported a 13-per-cent slide in Asia sales driven by weakening demand in China.
The results were the latest hint of the deepening fallout for companies of U.S.-China trade tensions and a broader slowdown in the world’s second-largest economy.
Caterpillar said the slump in Asia was led by a 29-per-cent plunge in construction equipment sales and that it was struggling against growing local competition and the broader economic slowdown as well as retailers slashing inventory.
“Dealer inventories rose by about $800 million in the third-quarter last year as we were ramping up production to meet demand. Now as we see the end-markets slow, we are reducing the dealer inventories by $400 million in the quarter,” Chief Financial Officer Andrew Bonfie said.
The companies have signed a memorandum of understanding that allows the two entities to work together in the Chinese market. They plan to seek opportunities to manufacture aluminum body-in-white and powertrain components leveraging the robust technical resources and knowledge of high-pressure die casting (HPDC).
Blackstone Group Inc. (BX-N), the world’s largest manager of alternative assets such as private equity and real estate, was up 4.9 per cent after it said on Wednesday its distributable earnings in the third quarter fell 8 per cent year-on-year, but still beat analyst estimates.
Blackstone reported a drop in proceeds from asset sales in its private equity business, offset partly by a rise in distributable earnings in its real estate, corporate credit and hedge funds divisions.
Distributable earnings per share came in at 58 US cents, higher than the 53 US cents that analysts estimated on average, according to data compiled by Refinitiv.
Freeport McMoRan Inc. (FCX-N), the world’s largest publicly listed copper miner, increased 2 per cent despite reporting a third-quarter loss on Wednesday as copper production was hit by lower output at its Peru mine and its move to underground mining at its giant Grasberg mine in Indonesia.
The Arizona-based has already warned that production at the Grasberg mine in Indonesia is expected to slip as it switches its operations to underground mining from open pit.
On the decline
Rogers Communications Inc. (RCI-B-T) dropped 8.1 per cent after it reduced its financial guidance as it reported a profit of $593-million in its latest quarter, compared with $594 million in the same quarter last year.
The cable and wireless company says it earned $1.14 per diluted share for the quarter ended Sept. 30, down from $1.15 per diluted share a year ago.
Revenue totaled $3.75 billion, down from nearly $3.77 billion in the same quarter last year.
In a research note, Desjardins Securities analyst Maher Yaghi said: “This morning, RCI reported 3Q19 financial results which were below expectations, although subscriber metrics were in line. More importantly, management reduced its 2019 guidance below the Street’s expectations as a result of the rapid adoption of unlimited plans. While we had anticipated the possibility of a revenue guidance reduction, the company also reduced EBITDA guidance as the short-term impact from overage revenue declines was too much to offset. The stock’s relative valuation vs peers is at a multi-year low but given the precipitous drop in earnings growth, it could take investors a few quarters to regain confidence in the medium-term outlook.”
Canadian National Railway Co. (CNR-T) was 0.2 per cent lower after it cut its 2019 profit outlook as rail volumes slump in a weakening economy. Montreal-based CN said growth in cargo volumes will decline this year as demand for rail freight slows amid trade tensions and economic uncertainty.
CN’s adjusted per-share profit growth for 2019 will be less than 10 per cent, down from the low double-digit forecast issued in July, the railway said as it released third-quarter financial results on Tuesday after markets closed.
- Eric Atkins
Texas Instruments Inc. (TXN-Q) slid over 7.5 per cent after announcing it expects current-quarter revenue to fall below estimates, which is seen as the latest sign that the global microchip industry is being squeezed by a downturn in demand as well as a prolonged U.S.-China trade dispute.
The company, seen as a bellwether for the sector, said it expected revenue for the fourth quarter in the range of US$3.07-billion and US$3.33-billion, below analysts’ average expectation of US$3.59-billion.
RBC Dominion Securities analyst Mitch Steves said: “Overall, we remain on the sidelines as it relates to TXN as broad-based weakness continues to be seen. Generally speaking, we prefer being long memory/data center names as opposed to longer cycle duration semiconductor assets like TXN at this time. Over a 5-10 year time frame, we think TXN is one of the best-in-class assets; however, we believe there are limited levers to pull when going through a semiconductor downturn as it relates to the gross margin profile. Finally, with a multiple in the 20s, we think the valuation remains “full” despite a high-quality long-term business model.”
Nike Inc. (NKE-N) was down 3.5 per cent after announcing after the bell on Tuesday that its long-time chief executive officer, Mark Parker, will step down next year and be replaced by John Donahoe, the CEO of cloud computing firm ServiceNow Inc. (NOW-N), the footwear and apparel maker said on Tuesday.
Mr. Parker had said last year he would remain CEO and chairman of the footwear maker beyond 2020, with his remarks coming at a time the company was hit by a series of executive departures and probes on workplace complaints.
Shares of Servicenow plummeted 3.6 per cent.
Granite Real Estate Investment Trust (GRT-UN-T) was down 3 per cent in the wake of a premarket announcement that it has increased its previously announced equity offering to $256-million due to “strong” demand.
The REIT intends to use the proceeds to partially fund recent acquisitions, commitments under the REIT’s existing development projects, potential future acquisitions and for general trust purposes.
With files from staff and wires