A roundup of some of the North American equities making moves in both directions today
On the rise
Parkland Corp. (PKI-T) gained on Wednesday after saying its net earnings surged to $76-million during the third quarter despite a 24 per cent decrease in revenues.
The Calgary-based fuelling company says the earnings attributable to Parkland equated to 51 cents per basic share, up from 16 cents per share or $24-million a year earlier.
Revenues for the three months ended Sept. 30 were $3.5-billion, down from $4.6-billion in the third quarter of 2019.
Parkland says its fuel and petroleum product volume is continuing to recover from the impact of COVID-19 and was within five per cent of its third quarter 2019 volumes.
In Canada, steady volume recovery, strong fuel margins and convenience store sales drove a 23-per-cent increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) from the prior year to $128-million.
Fuel volume decreased seven per cent to 2.3 billion litres due to the impact of COVID-19. Convenience store same-store sales were 10.7 per cent, with strength of its rebranded On the Run sites.
Calling it a “home run quarter,” Canaccord Genuity analyst Derek Dlet said: “Parkland reported impressive Q3/20 earnings results on Tuesday night. Adjusted EBITDA of $338-million came in well ahead of our $279 million forecast and consensus' $276-million estimate. The beat was primarily driven by robust margin performance in the Canada, USA and International segments that offset weaker volumes due to COVID-19, as well as tight cost control across all segments.”
The Calgary-based company reported adjusted EBITDA of $196-million, exceeding the Street’s $188-million forecast despite a performance by its Gathering & Processing segment that fell short of expectations.
Desjardins Securities analyst Justin Bouchard said: “Despite the positive headline, our concern is that the G&P results in the context of stagnating producer activity will raise questions on the long-term fundamentals of the business. Beyond the 3Q20 update, KEY provided partial 2021 guidance, most notably for growth capex ($400–450-million, largely focused on advancing KAPS).”
Uber (UBER-N) and Lyft (LYFT-Q) stocks soared on Wednesday after California voters endorsed the gig economy’s blistering campaign not to count drivers as employees, even as questions loomed over whether the companies can secure similar privileges in other U.S. states.
Voters in California on Tuesday backed a ballot proposal by Uber Technologies Inc, Lyft Inc and its allies that cements app-based food delivery and ride-hailing drivers' status as independent contractors, rather than employees.
According to state figures, 58 per cent supported the measure, with nearly 95 per cent of precincts at least partially reporting. The results are incomplete and must also be certified.
The companies, along with DoorDash, Instacart and Postmates, have collectively poured more than US$205-million into the campaign.
Hilton Worldwide Holdings Inc. (HLT-N) rose after it said on Wednesday it had seen a gradual improvement in demand from a coronavirus-induced slump after cost cuts helped the U.S. hotel operator post a surprise quarterly profit.
The company’s comparable RevPAR - a key performance measure for the hotel industry - fell 59.9 per cent for the third quarter ended Sept. 30, albeit at a slower pace than the prior quarter’s 81-per-cent drop.
“The vast majority of our properties around the world are now open and have gradually begun to recover from the limitations that the COVID-19 pandemic has imposed on the travel industry,” Chief Executive Officer Christopher Nassetta said in a statement.
Hilton’s results come at a time when air travel remains challenged due to rising coronavirus cases in Europe and the United States.
Net loss attributable to stockholders was US$79-million, or 28 US cents per share, in the third quarter, compared with a net income of US$288-million, or US$1.00 per share, a year earlier.
On an adjusted basis, Hilton earned 6 US cents per share, beating analysts' estimates for a loss of 2 US cents per share, according to Refinitiv data.
On the decline
Shares of cannabis producers Tilray Inc. (TLRY-Q), Canopy Growth Corp. (WEED-T), Cronos Group Inc. (CRON-T) and Aurora Cannabis Inc. (ACB-T), dropped amid uncertainty over the outcome of the U.S. election.
Major cannabis producers surged after the vice presidential debate, when vice-presidential candidate Kamala Harris said marijuana would be decriminalized at the federal level under a Biden administration.
Canopy shares initially rose in premarket trading after it said late Tuesday it would move its U.S. stock listing to the Nasdaq, following rival Aphria Inc. (APHA-T) in favoring the exchange’s “cost-effectiveness”.
Years of high expenses and a lack of profitability have soured investor sentiment towards Canadian pot producers, forcing the companies to cut costs aggressively this year by shuttering facilities, laying off employees and resetting portfolios.
TransAlta Corp. (TA-T) erased early gains and fell lower on Wednesday after saying it will end operations at its Highvale thermal coal mine west of Edmonton by the end of 2021 as it switches to natural gas at all of its operated coal-fired plants in Canada four years earlier than previously planned.
The announcement will result in hundreds of mine job losses as employment drops to 40 to 50 people involved in reclamation work, expected to take about 20 years, from a peak workforce of around 1,500, said CEO Dawn Farrell on a conference call on Wednesday.
TransAlta confirmed last week it had closed a $400-million second tranche of a $750-million investment by an affiliate of Brookfield Asset Management, with the proceeds to be used to advance its coal-to-gas conversion program and other corporate purposes.
But on the call, Ms. Farrell said Brookfield’s purchase of convertible securities wasn’t responsible for the board’s decision to accelerate its coal-to-gas conversions.
“It’s really related to, overall, the economics of producing power in Alberta on coal with the carbon tax,” she said on the call.
Hudbay Minerals Inc. (HBM-T) also reversed course and fell in the wake of releasing better-than-anticipated third-quarter results after the bell on Tuesday.
The Toronto-based company reported a loss of 9 cents per share, exceeding the Street’s projection of a 12-cent loss. Cash flow per share of 32 cents also topped the consensus estimate (24 cents).
The beat came largely from higher sales volumes than expected across its metals as well as in-line operating costs.
In a research note, Industrial Alliance Securities analyst George Topping said: “A solid production quarter overall and 2020 guidance was left unchanged. The news that [New Britannia] will be commissioned early and that Lalor is successfully accessing the gold zone is very good news given record CAD gold prices ($2,500 per ounce). While the 777 accident, with the skip falling in the shaft, was a reputational black eye, the speed and low cost to rectify it followed by the NB mill refurbishment coming in ahead of schedule goes a long way in re-establishing investor confidence. Hubday trades at 0.6 times NAV and 3 times 2021 CFPS while high country risk First Quantum trades at 0.9 times NAV and 7 times 2021 CFPS.”
After the bell, the Vancouver-based miner reported adjusted earnings per share of 15 US cents, a penny better than the Street’s estimate.
Canaccord Genuity’s Carey MacRury said: “The company continues to execute well, is essentially debt-free and is well positioned to fund its growth projects and dividend from operating cash flow while still building a sizeable cash balance at current gold prices. B2Gold remains one of our top picks among the senior producers.”
The uranium producer reported revenue of US$379-million, up 25 per cent year-over-year but below the US$392.8-million expectation on the Street. Adjusted Earnings per share of a 15-US-cent loss also fell short of the consensus forecast (a 5-US-cent loss).
Indigo Books & Music Inc. (IDG-T) slid even though a growing interest in reading and at-home entertainment for kids during the pandemic has helped it to a narrower loss in its second quarter.
The Toronto-based retailer reported a net loss of $17.5-million for the 13 weeks ended Sept. 26, compared to a $20.5-million net loss in the same period last year. Like most brick-and-mortar stores, Indigo has seen foot traffic remain low as regions across the country continue to grapple with the COVID-19 pandemic, while its online sales more than doubled in the quarter, growing by 113.6 per cent.
- Susan Krashinsky Robertson
With files from staff and wires