A roundup of some of the North American equities making moves in both directions today
On the rise
Shares of U.S. health insurers soared in early afternoon trading on Wednesday in the wake of a strong showing for Joe Biden in the Super Tuesday Democratic primaries.
Mr. Biden, a moderate considered less likely to raise taxes and impose new financial regulations, won Texas and eight other states, setting up a one-on-one battle for the Democratic nomination with Bernie Sanders
The possibility of a Sanders nomination has hurt those stocks in the past few months as his “Medicare for All” proposal would eliminate private health insurance altogether
UnitedHealth Group Inc. (UNH-N), Centene Corp. (CNC-N), and Cigna Corp. (CI-N) surged 10.7 per cent, 15.6 per cent and 10.8 per cent, respectively.
Canadian National Railway Co. (CNR-T) increased 3.6 per cent after Chief Executive Jean-Jacques Ruest said late Tuesday it lost capacity equivalent to 10,000 carloads, or 1 million tonnes of grain exports, in February due to rail blockades by protesters opposed to a pipeline project.
Activists disrupted passenger and freight traffic last month to show solidarity with the Wet’suwet’en people, who are seeking to stop TC Energy Corp’s Coastal GasLink pipeline from being built across their land.
“In the case of CN we lost the equivalent of 10,000 carloads, or roughly 1 million tonnes,” Mr. Ruest said in an interview. “Of all the supply chains the one that will take the longest (to recover) is the grain export.”
The lost capacity represents roughly 1 per cent of Canada’s total harvest during the 2019-20 marketing year, which runs from Aug. 1, 2019, through July 31, 2020.
Tourmaline Oil Corp. (TOU-T) was up 1.7 per cent following the post-market release of its quarterly results on Tuesday.
AltaCorp’s Patrick O’Rourke said: “· Overall, we view the event as positive, with a strong CF beat of consensus expectations on the back of the Company’s gas marketing portfolio along with better than expected operating costs, and a quality reserve reported including 24% growth in PDP NGL volumes (where condensate volumes are accounted for) along with 1.8x PDP recycle which continues to highlight the resilience of TOU’s business model. We continue to point to TOU as our preferred gas levered stock, where we see a combination of liquids growth, strong management, a reasonably clean balance sheet, strategic/accretive M&A and a potential medium-term catalyst in the form of a Topaz liquidity event all playing-out through the balance of 2020.”
Aecon Group Inc. (ARE-T) was 1.7 per cent higher in the wake of raising its quarterly dividend 10 per cent after reporting record revenues last year but weaker fourth-quarter results.
The Toronto-based construction firm will pay 16 cents per share on April 2, up from 14.5 per cent previously.
Aecon says it earned $20.2-million or 31 cents per diluted share for the three months ended Dec. 31, compared with $27.9-million or 41 cents per share a year earlier.
Revenues decreased 3.3 per cent to $917.3-million.
The company was expected earn 32 cents per share on $934.6-million in revenues, according to financial markets data firm Refinitiv.
Industrial Alliance Securities analyst Neil Linsdell said: “While revenue growth was below forecasts, profitability was still higher than expected, and excluding a one-time executive transition expense and contribution from a divested business from last year’s results, Aecon produced modest growth and profitability improvements. A near-record backlog of $6.8-billion and continuing positive outlook for infrastructure spending in Canada gives us confidence in maintaining our Strong Buy recommendation.”
TransAlta Corp. (TA-T) increased 3.4 per cent reported a fourth-quarter profit of $66-million compared with a loss of $122-million in the fourth quarter of 2018.
The power producer says the profit amounted to 24 cents per diluted share for the three months ended Dec. 31 compared with a loss of 43 cents per diluted share in the last three months of 2018.
Revenue totalled $609-million, down from $622-million in the same quarter a year earlier.
Funds from operations for its most recent quarter were $189-million or 67 cents per share compared with $217-million or 76 cents per share in the same period a year earlier.
Irvine, Calif.-based Skyworks Solutions Inc. (SWKS-Q), a chip supplier to Apple Inc’s iPhones, rose 3.7 per cent after saying Wednesday the coronavirus has not significantly disrupted its manufacturing operations.
The chipmaker, however, cut its second-quarter revenue forecast, saying interruptions in global supply chains is hurting demand for its products.
The company cut its revenue outlook to between US$760-million and US$770-million, from US$800-million to US$820-million. Analysts were expecting revenue of US$790.1-million, according to IBES data from Refinitiv.
Abercrombie & Fitch Co. (ANF-N) rose 9.5 per cent after beating quarterly same-store sales estimates on Wednesday, boosted by strong demand for its flagship clothing brand in the holiday season.
Sales at established stores rose 1 per cent in the fourth quarter ended Feb. 1, while analysts on average had expected a climb of 0.7 per cent, according to IBES data from Refinitiv.
The retailer said it expects a hit of up to US$80-million to its annual revenue due to the coronavirus outbreak and forecasts fiscal 2020 net sales growth of flat to 2 per cent, while analysts expected a rise of 1.6 per cent.
U.S. food company Campbell Soup Co. (CPB-N) was up 10.3 per cent as it raised its forecast for annual earnings on Wednesday, after beating Wall Street estimates for quarterly profit and sales, powered by improved demand at its soup business.
The 150-year-old company has amped up marketing, introduced new recipes and eliminated preservatives to revive slowing soup sales, as consumers increasingly prefer fresher food options.
This helped the company record a 1-per-cent rise in sales at its U.S. soup business in the reported quarter, due to higher demand for condensed soups and broth.
The company forecast fiscal 2020 adjusted earnings to be in the range of US$2.55 to US$2.60 per share, up 5 US cents from an earlier forecast.
It said the raised forecast reflect lower adjusted net interest expense due to reduced debt.
General Electric Co. (GE-N) rose 0.6 per cent higher after saying on Wednesday that it expects a hit of US$300-million to US$500-million to its first-quarter cash flow from the coronavirus outbreak, while reaffirming its cash and profit targets for the full year.
GE had previously set 2020 cash target of US$2-billion to US$4-billion, while estimating an adjusted profit of 50 US cents to 60 US cents per share.
On the decline
Paramount Resources Ltd. (POU-T) lost 8.8 per cent after it reported before the bell a net loss of $31.1-million or 24 cents per share versus a loss of $170.5-million a year earlier. Adjusted funds flow was $93.5-million or 71 cents versus $45.5-million or 35 cents a year earlier.
AltaCorp Capital analyst Patrick O’Rourke said: “· Overall, we view the event as neutral to positive, with cash flow ahead of estimates driven by better than anticipated liquids cuts and higher quality liquids barrels (supported by a strong Karr/Wapiti well results update). The reserve report is somewhat noisy, with a combination of strong liquids adds from the Grande Prairie unit development program offset by recently announced dispositions as well as reduced FDC to the Kaybob Unit. 2020 production guidance is 12 per cent lower than previously modelled, but investors are likely to focus on the Company’s capital discipline which sees the mid-point of capex guidance 21 per cent below consensus. Finally, a $238-million reduction in the ARO account is a clear directional positive for the Company.”
Dollar Tree Inc. (DLTR-Q) slipped 3.8 per cent after it forecast weak first-quarter sales and profit on Wednesday, citing higher discounts and tariff pressures.
The discount retailer also struggled to attract shoppers to its Family Dollar stores, which resulted in its same-store sales missed Wall Street estimates for the fourth quarter.
Chief Executive Officer Gary Philbin said the pressure from the tariffs and promotional activity will be limited to the first quarter and the company is well-positioned for the rest of the year.
It forecast net sales between US$5.89-billion and US$5.99-billion and low single-digit growth in same-store sales. Analysts were expecting net sales of US$6.02-billion for the current quarter.
The company also forecast earnings per share between US$1 and US$1.09, including tariff costs, which was below the analysts’ average estimate of US$1.20.
Hewlett Packard Enterprise Co. (HPE-N) dropped 2.6 per cent after it cut its free cash flow forecast for the year citing supply constraints due to the coronavirus outbreak, and reported a lower-than-expected quarterly revenue.
The computer hardware maker’s shares fell more than 5% in after-market trading.
HPE now expects 2020 free cash flow between US$1.6-billion and US$1.8-billion, down from its prior outlook of US$1.9-billion to US$2.1-billion.
“The health issue is causing disruption to both supply and demand, and while we cannot quantify the real impact at this time, we’re monitoring the situation closely and are working with our suppliers to minimize potential impact,” Chief Financial Officer Tarek Robbiati said on a post earnings call with analysts.
In a research note, Citi’s Jim Suva said: “The biggest news was that the company lowered its free cash flow outlook for 2020 by 15 per cent or $300-million due to the impact from Coronavirus which is impacting sales and the supply chain, thereby having an adverse impact on the company’s cash flows. While the company is making proactive efforts to shift to higher profits products as well as cost controls to help EPS, it now appears HPE will see a sales decline in 2020 compared to a view of 1-2-per-cent sales growth provided at its security analyst meeting in October 2019. We maintain our Neutral view on the shares and lower our target price to $14 from $17 previously and we are concerned by what we believe are share losses to companies such as Dell in storage”
Nordstrom Inc. (JWN-N) declined 1.7 per cent as it forecast a 2020 profit largely below market expectations on Tuesday evening, after the upscale apparel retailer missed estimates for fourth-quarter revenue.
The Seattle-based company has been struggling to attract shoppers at a time when they increasingly prefer retailers with a strong online presence such as Walmart Inc and Target Corp, as well as Amazon.
Nordstrom expects to earn US$3.25 to US$3.50 per share in fiscal 2020, compared with analysts’ estimates of US$3.49 per share, according to IBES data from Refinitiv.
The company said the forecast does not include any impact from the coronavirus outbreak.
Net earnings fell to US$193-million, or US$1.23 per share, in the three months ended Feb. 1, from US$248-million, or US$1.48 per share, a year earlier.
The reported quarter included a 19 US cents per share charge related to the integration of Trunk Club stores and debt refinancing costs.
With files from staff and wires
David Leeder