A roundup of some of the North American equities making moves in both directions today
General Mills Inc. (GIS-N) jumped 2.2 per cent on Wednesday after reporting a higher-than-expected third-quarter profit that led to an increase in its full-year forecast.
Excluding one-time items, the company earned 83 US cents per share for the quarter, blowing past the 69 US cent consensus estimate on the Street, as price increases helped boost margin and overturn declining revenue.
The food company now expects adjusted profit for fiscal 2019 to be between flat and 1 per cent, improving from its previous forecast of flat to down 3 per cent.
"We had a strong third quarter, with positive organic sales growth and significant operating margin expansion," said chairman and chief executive officer Jeff Harmening in a statement. "Our year-to-date performance and fourth-quarter plans give us confidence that we will meet or exceed all of our key fiscal 2019 targets. For the full year, we now expect adjusted diluted EPS and free cash flow conversion will exceed our initial targets, net sales will finish toward the lower end of our guidance range, and adjusted operating profit will finish toward the higher end of the range. Our improved execution and strengthened performance this year reinforce our view that a balanced approach to top and bottom-line growth, centered on our Consumer First strategy, will drive long-term value for our shareholders."
Canopy Growth Corp. (WEED-T) was up 1.6 per cent in the wake of a premarket announcement that it has entered into a multi-year processing and extraction agreement with HollyWeed North Cannabis Inc.
Under the terms of the two-year agreement, B.C.-based HollyWeed will process dried cannabis provided by Canopy Growth, in their manufacturing facility in Victoria and will return the high-quality oil and resin back to the company.
Alimentation Couche-Tard Inc. (ATD-B-T) rose 0.03 per cent despite its third-quarter profit falling short of analysts’ expectations.
On Tuesday after market close, the convenience store operator report earnings of $1.08 per share, excluding one-time items, missing the consensus estimate on the Street of $1.17. The miss was partially attributable to higher expenses, which rose 7 per cent year-over-year versus a 3.4-per-cent increase in revenue.
Desjardins Securities analyst Keith Howlett said: “While the headline shortfall to consensus EPS may pressure the shares today, we view the doubling of EPS, the reduction of adjusted debt to 2.38 times EBITDAR, the 25-per-cent dividend increase and the 4-million share buyback authorization as positive.”
Starbucks Corp. (SBUX-Q) was up 0.4 per cent after announcing it is investing US$100 -million in a newly created fund that will be managed by Tesla Inc. investor Valor Equity Partners to “identify and invest in companies that are developing technologies, products, and solutions relating to food or retail.”
The Valor Siren Ventures Fund will later seek to raise an additional US$300-million, the company said on Wednesday, ahead of its annual shareholder meeting.
John Bereznicki pointed to “rapid synergy realization from the company’s recent Trinidad acquisition along with more buoyant activity expectations.”
Iamgold Corp. (IMG-T) finished 0.3 per cent higher after announcing a 32-per-cent reduction in its workforce at its Westwood Gold Mine in Quebec.
The company said the move was made as a result of both planned reductions due to the stage of mine development as well as realignment reductions due to the previously disclosed production guidance.
“We concluded that this difficult decision had to be made in conjunction with planned reductions after assessing the balance of production levels and costs. We remain focused on developing a long term plan for Westwood that is both safe and profitable,” said CEO and president Steve Letwin in a statement.
Power Financial Corp. (PWF-T) rose 0.5 per cent after its fourth-quarter results fell short of expectations. The Montreal-based company reported earnings per share of 67 cents, missing the Street’s projection of 77 cents.
Power also announced a 5.2-per-cent increase to its quarterly dividend to 45.55 cents per share.
On the decline
FedEx Corp. (FDX-N) dropped 3.5 per cent after reducing its 2019 profit forecast for the second time in three months alongside weaker-than-anticipated quarterly results.
“Slowing international macroeconomic conditions and weaker global trade growth trends continue,” chief financial officer Alan Graf said in a statement. “We have launched our voluntary employee buyout program, constrained our hiring, are limiting discretionary spending and are reviewing additional actions to mitigate the lower-than-expected revenue trends.”
FedEx now expects to earn US$15.10 to US$15.90 for the 2019 fiscal year. The Street had predicted US$15.97.
In a research note, Citi analyst Christian Wetherbee said: “Make no mistake, F3Q was a disappointment, and we don’t believe there is a rush as F4Q plays out, but risk/reward looks favorable and we think a clean slate (including potential write-down) and official F20 guidance coming in June could finally help put in a floor and present a catalyst for upside, assuming a relatively stable macro scenario.”
In a research note released Wednesday morning, RBC Dominion Securities analyst Stephen Walker said: “We expect a slightly negative reaction to Franco-Nevada’s year-end 2018 report, with financial results and 2019 guidance coming in broadly in line with our financial estimates although slightly below consensus estimates. The 2023 guidance was in line with our expectations and we believe there is potential for some near-term share price weakness.”
Industrial Alliance Securities’ George Topping said: “Overall, an in line Q4, but a larger than expected write-down was most likely due to prudence. A rebound at Candelaria, Cobre Panama coming on line, combined with funds flow from a gold price rally, will all provide catalysts for Franco in 2019. Longer term, we estimate the GEO portfolio will grow by an average of 6-7 per cent per annum over the next five years as Cobre Panama reaches steady state.”
Bausch Health Companies Inc. (BHC-T) dropped 3.7 per cent after an equity analyst at Bank of America Merrill Lynch reinstated coverage of the company, formerly known as Valeant Pharmaceuticals International Inc., with an “underperform” rating. Jason Gerberry pointed to “fundamental challenges” as Bausch continues its recovery.
It plans to use the proceeds to “strategically increase the Company’s domestic geographic presence, increase production capacity and white label offerings” and general corporate purposes. On Monday, Valens announced a multi-year extraction services contract with The Green Organic Dutchman Holdings Ltd. (TGOD-T).
With files from wires and staff