A roundup of some of the North American equities making moves in both directions today
On the rise
Canadian Imperial Bank of Commerce (CM-T) rose 1 per cent on Wednesday after it increased quarterly profit by 3 per cent and raised its dividend, but also shuffled its executive ranks and took a $339-million restructuring charge.
The charge is mostly made up of severance costs after chief executive officer Victor Dodig told staff to expect layoffs in an internal memo last month. But the restructuring reaches the bank’s highest ranks, with the appointment of a new head of retail banking and a new chief risk officer, as The Globe and Mail previously reported.
Canada's fifth-largest bank reported profit of $1.21-billion, or $2.63 per share, compared with $1.18-billion, or $2.60 a share, in the same quarter last year.
After adjusting for the restructuring charge, which will cost the bank $250-million after tax, and for other items, CIBC said profit rose 9 per cent to $1.48-billion, or $3.24 per share. Analysts expected adjusted earnings per share of $3.00, according to Refinitiv.
- James Bradshaw
The Ottawa-based firm also announced the acquisition of Prana Consulting, a supply chain consultancy based in India. Prana has been a services partner of Kinaxis for more than 15 years.
In a research report, Canaccord Genuity analyst Robert Young said: “Considering full 2019 performance, Kinaxis reported 22.3-per-cent SaaS growth and an adj EBITDA margin of 30.1 per cent, consistent with our longer-term 25 per cent/25-per-cent model for the company, which is top-in-class among SaaS peers. The strong bookings activity led to a substantial 40-per-cent year-over-year increase in the SaaS backlog and comforting 83-per-cent coverage of the 2020 SaaS guidance at the midpoint. An area of concern may be a weaker-than-consensus margin guide calling for adj EBITDA margin of 20-23%, below our estimate of 24.8 percent, although this is mostly due to the decline in subscription term license revenue, which was well telegraphed. As well, we note that Kinaxis has historically laid out attainable guidance at the outset of the year and has repeatedly stated that it would pursue growth opportunities over margins.”
On March 3, the coffee chain will launch an egg and cheddar breakfast sandwich with a patty made by Beyond Meat Inc. Canada is the first market in the world for Starbucks to launch a Beyond Meat product, or any breakfast sandwich incorporating imitation meat.
In September, quick-service giant McDonald’s Corp. tapped Southwestern Ontario as a test market for a new Beyond Meat burger, as it mulls whether to launch such products in more restaurants globally. Last month, McDonald’s said it would expand the test to more restaurants in the region and extend the three-month trial to six months. Beyond Meat’s stock rose more than 11 per cent on the day of the initial announcement in September: McDonald’s represents a significant potential client with approximately 38,000 restaurants in 100 countries. Starbucks has roughly 31,000 locations worldwide and 1,587 in Canada; the majority of stores nationwide will offer the new sandwich.
- Susan Krashinsky Robertson
TJX Companies Inc. (TJX-N) jumped 7.3 per cent as it beat quarterly same-store sales estimates on Wednesday, as more customers flocked to the off-price retailer’s T.J. Maxx and Marshalls’ stores during the holiday shopping period.
The company’s efforts to draw in customers through newly formatted stores with better lighting, flooring and enhanced shelves, and its marketing campaign for the holiday season paid off.
“Our exciting brands and gift-giving assortments at great values, supported by our marketing, attracted customers around the globe during the holiday season and beyond,” said Chief Executive Officer Ernie Herrman.
The company reported a 6 per cent rise in comparable-store sales during the quarter, trouncing the average analyst estimate of a 3.03-per-cent rise, according to IBES data from Refinitiv.
Net income rose to US$984.8-million, or 81 US cents per share, in the fourth quarter ended Feb. 1 from US$841.5-million, or 68 US cents per share, a year earlier.
Jams and peanut butter maker J. M. Smucker Co. (SJM-N) gained 1.3 per cent after it reported quarterly profit above market expectations on Wednesday, powered by its coffee business which sells Folgers and Dunkin’ Donut brands, even as its pet food unit continued to struggle.
As more premium coffee brands and single-serve coffee pods flood the market, Smucker diversified its coffee portfolio by adding high-end options with gourmet flavors to win young customers.
Chief Executive Officer Mark Smucker said continued investments, including on product development and marketing, improved volumes for coffee and peanut butter brands, which helped offset the anticipated decline in its pet food unit.
Excluding items, the company earned US$2.35 per share, beating Wall Street estimates of US$2.23 per share, according to IBES data from Refinitiv.
Net sales fell about 2 per cent to US$1.97-billion in the third quarter ended Jan. 31, in line with analysts’ estimates.
On the decline
The company says the move is the next step in its plan to focus its business on wealth management.
GMP sold the bulk of its capital markets business to Stifel Financial Corp. in a deal worth roughly $70 million last year.
Under the agreement today, GMP says it expects to issue nearly 111 million shares to shareholders of Richardson GMP. GMP shares closed at $1.80 on the Toronto Stock Exchange on Tuesday.
Richardson Financial Group Ltd. (RFGL), GMP’s largest shareholder with a 24.1 per cent stake, will increase its ownership to 39.7 per cent following the completion of the deal.
Existing GMP shareholders, other than RFGL, will hold 30.7 per cent and Richardson GMP investment advisors will hold 29.6 per cent.
Shares of Walt Disney Co. (DIS-N) fell 3.7 per cent on Wednesday after the media giant’s surprise move to replace top boss Bob Iger raised questions on Wall Street if his successor Bob Chapek had sufficient experience in the entertainment business.
Mr. Chapek headed Disney’s parks business, its largest, and oversaw the opening of the company’s first theme park and resort in mainland China and the creation of the new Star Wars: Galaxy’s Edge lands at Disneyland and Walt Disney World.
While Wall Street analysts were largely positive about the change, some were skeptical.
“Bob Chapek has less (content experience), having spent his Disney career in distribution of content and/or the physical world of parks, retail, and consumer products (ie, minimal storytelling, despite the fact that even he says that storytelling is at the center of Disney’s value proposition),” Needham analyst Laura Martin said.
Two former employees Reuters talked to expressed surprise that Kevin Mayer, chairman of Direct-to-Consumer and International, was not named to the top job, especially after the roll-out of the Disney+ streaming service, which attracted 10 million sign-ups in its first day.
Lowe’s Companies Inc. (LOW-N) slid 4.4 per cent despite reporting lower-than-expected quarterly sales on Wednesday as it failed to make the most of the strongest U.S. home building market since 2006 unlike larger rival Home Depot Inc.
The company’s disappointing sales come as it focuses more on shoring up its profit margins by shutting underperforming stores. In contrast, Home Depot has been investing heavily in its online operations to boost market share in an expanding U.S. economy.
U.S. homebuilding fell less than expected in January, following three straight monthly increases and was still at levels last seen in December 2006. Building permits soared to a near 13-year high pointing to sustained housing market strength.
Lowe’s same-store sales rose 2.5 per cent in the fourth quarter ended Jan. 31, below expectations of a 3.6-per-cent increase, according to IBES data from Refinitiv.
Same-store sales at Home Depot jumped 5.2 per cent in the same period.
Wedbush analyst Seth Basham said Home Depot’s sales figures raised expectations for Lowe’s, which was likely still facing issues in pulling traffic to its stores.
Dirtt Environmental Solutions Ltd. (DRT-T) plummeted 33.5 per cent in the wake of reporting revenue of US$53.2-million for the fourth quarter, down from US$74.4-million reported in the prior-year period.
"In the fourth quarter, we experienced continued disruption in sales activity levels, particularly with respect to larger size projects, stemming from the distraction of significant management changes during 2018 on a long sales cycle combined with the immature and transitional state of our sales and marketing function," the company stated.
Its net loss was US$7.5-million or 9 US cents per share compared to net income in the prior-year period of US$3.1 million or 4 US cents share.
Tesla Inc. (TSLA-Q) lost 3.1 per cent amid reports Japan’s Panasonic Corp.is considering pulling out of solar cell production at the electric vehicle maker’s plant in New York, said people with direct knowledge of the matter, raising uncertainty over the firm’s struggling solar business.
The move would come as the Japanese electronics company scrambles to divest of unprofitable businesses as its strategic shift to components from consumer electronics struggles to drive profit growth.
Panasonic will retain its automotive battery joint venture with the U.S. electric vehicle maker in the U.S. state of Nevada, which just reported its first quarterly profit after years of production troubles and delays, one of the people said.
The people declined to be identified as the matter was still under discussion. Panasonic declined to comment. Tesla was not immediately available for comment.
Tesla’s plan to manufacture solar products in New York has come under scrutiny as the company drastically scaled back the U.S. solar business it acquired in 2016 with the US$2.6-billion purchase of SolarCity.
Low demand from Tesla left Panasonic sending most cells from the plant to overseas clients, instead of selling them to Tesla for its trademark Solar Roof - cells designed to look like regular black roof tiles - as initially intended.
Billionaire Richard Branson’s space tourism company, Virgin Galactic Holdings Inc. (SPCE-N) was down 15.5 per cent after it said on Tuesday its fourth-quarter net loss widened to $73 million from a year-ago loss of US$46-million as it reported its first results as a publicly traded company.
The fourth-quarter results come as the company is aiming for a first flight later this year with Branson on board, while seeking a new source of revenue in thousands of potential space travelers.
Shares had rallied in recent days, driven by investor interest in the first space tourism company to hit public markets.
Virgin Galactic competes with billionaire-backed ventures such as Blue Origin, founded by Amazon Inc CEO Jeff Bezos, to be the first to offer suborbital flights to fare-paying tourists, presaging a new era of civilian space travel that could kick off as soon as this year.
With files from Brenda Bouw, staff and wires