A roundup of some of the North American equities making moves in both directions today
On the rise
Torc Oil & Gas Ltd. (TOG-T) soared in the wake of the late Tuesday announcement that it is set to be acquired by Whitecap Resources Inc. (WCP-T) in a $565-million all-stock deal.
Under the deal, Torc stockholders will get 0.57 of a Whitecap share for each of Torc share. Whitecap will also assume $335-million of Torc debt, for a total value of $900-million.
Torc’s operations, located in southeastern Saskatchewan and west-central Alberta, have “significant overlap” with Whitecap’s, the companies said.
- Jeffrey Jones
See also: Wednesday’s analyst upgrades and downgrades
Dollarama Inc. (DOL-T) increased after it beat analysts’ estimates for third-quarter sales on Wednesday, as customers largely staying at home due to the COVID-19 pandemic spent more on Halloween decorations and household essentials.
Demand for discounted items and economy packs has been strong due to high unemployment and a decline in household income in several major economies, with hunkered-down consumers buying more low-priced seasonal items.
The company’s U.S. counterparts Dollar General and Dollar Tree have signaled a strong start to the holiday selling season even as analysts have said fewer Thanksgiving and Christmas gatherings could hit overall retail sales.
See also: Dollarama hikes dividend, posts sales gain as pandemic demand continues
Dollarama’s net sales rose to $1.06-billion in the quarter ended Nov. 1, from $947.6-million a year earlier, compared with Refinitiv IBES estimates of $994.9-million.
Comparable store sales increased 7.1 per cent as consumers bought more items per visit.
Net earnings rose to $161.9-million, or 52 cents per share from $138.6-million, or 44 cents per share, a year earlier.
Clothing retailer Roots Corp. (ROOT-T) soared after it reported its third-quarter profit rose compared with a year ago as the company cut costs.
Roots says it earned $10.3-million or 24 cents per diluted share for the quarter ended Oct. 31 compared with a profit of nearly $2-million or five cents per diluted share a year earlier.
Sales totalled $72.9-million, down from nearly $86.4-million in the same quarter last year.
The company says the drop in sales was predominantly due to a decrease in store traffic because of the pandemic, partially offset by a 40 per cent increase in online sales.
On an adjusted basis, Roots says it earned 27 cents per share, up from 10 cents per share in the third quarter of 2019.
Analysts on average had expected an adjusted profit of seven cents per share and $73.2-million in sales, according to financial data firm Refinitiv.
Lowe’s Cos Inc. (LOW-N) jumped after it announced its board had authorized a new US$15- billion share repurchase program, as the home improvement chain benefited from strong sales of tools and building materials due to people upgrading their homes during the COVID-19 pandemic.
The buyback program has no expiration date and adds to the previous program’s balance, which was US$4.7-billion as of Dec. 8, the company said on Wednesday.
The company also said it was introducing a new “Total Home” strategy to boost its market share by offering products and services such as paints, decor and repairs to its do-it-yourself as well as professional customers.
Lowe’s had already been investing in its supply chain and e-commerce unit to better compete with larger rival Home Depot Inc.
The company also reaffirmed its fourth-quarter forecast.
Lowe’s expects total sales for fiscal 2020 to increase about 22 per cent and forecasts adjusted earnings per share to be between US$8.62 and US$8.72.
See also: Online investments, staff pay weigh on Lowe’s holiday quarter profit view
On the decline
Facebook Inc. (FB-Q) was down U.S. federal regulators asked for it to be ordered to divest its Instagram and WhatsApp messaging services as the U.S. government and 48 states and districts accused the company of abusing its market power in social networking to crush smaller competitors.
The antitrust lawsuits were announced by the Federal Trade Commission and New York Attorney General Letitia James.
“It’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market,” Ms. James said during a press conference announcing the lawsuit.
In its lawsuit, the FTC is seeking the separation of the services from Facebook, saying Facebook has engaged in a “a systematic strategy” to eliminate its competition, including by purchasing smaller up-and-coming rivals like Instagram in 2012 and WhatsApp in 2014. James echoed that in her press conference, saying Facebook “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users.”
Pot firm Canopy Growth Corp. (WEED-T) was down after it said on Wednesday it would close some Canadian sites, a move expected to impact about 220 employees.
Profits have been elusive for most cannabis firms in Canada, which legalized recreational cannabis in October 2018, weighed down by fewer-than-expected retail stores, cheaper rates on the black market and sluggish overseas growth.
The COVID-19 crisis, which upended financial markets, has further slammed the sector by the making it harder to attract investments.
Canopy Growth said it will halt operations at St. John’s, Fredericton, Edmonton and Bowmanville, Ont.
It will also close its outdoor cannabis production sites in Saskatchewan.
Canopy Growth said the decision was linked to an ongoing end-to-end review undertaken to improve margins.
The company expects to incur related charges of about $350-million to $400-million in the third and fourth quarters of fiscal 2021.
Canadian Natural Resources Ltd. (CNQ-T) fell after it said on Wednesday it expects to raise production in 2021 and forecast capital spending to be about $3.21-billion, higher than 2020 forecast of $2.7-billion as the company bets on a faster rebound in demand and prices from pandemic lows.
Canadian oil companies are restoring production they had to shut-in to counter a steep price drop this year as the COVID-19 pandemic hammered fuel demand. Some are raising spending and production forecasts for next year, but remain cautious due to uncertainty over how long the pandemic will last.
The company plans to increase spending on natural gas production due to improving natural gas strip pricing and expects to raise output by about 11% in 2021.
The oil and gas producer also said it expects production of 1.19 million barrels of oil equivalent per day (boepd) to 1.26 million boepd next year, higher than the 1.16 million boepd it estimates for 2020.
Last month, peer Imperial Oil said it planned to spend $1.2-billion in 2021, up 33 per cent from 2020 while Suncor Energy Inc forecast higher production and spending targets for fiscal year 2021.
Gamehost Inc. (GH-T) dropped in response to new COVID-19-related restrictions implemented by Alberta’s government.
The Red Deer-based company has two wholly owned casinos in the province as well as a 91-per-cent stake in a Calgary casino as well as a hotel and strip mall in Grande Prairie.
Acumen Capital analyst Trevor Reynolds said: “Near term this is clearly a negative, but we note that management has proven they have the ability to reduce the burn rate quickly when required, and had never fully ramped up staffing levels from the first round of shut downs.”
Campbell Soup Co. (CPB-N) beat Wall Street estimates for quarterly revenue on Wednesday, as shoppers bulk-purchased its soups in preparation for winter and an extended at-home confinement due to COVID-19 curbs.
Consumers are looking for healthy snacks and quick fixes as they cook more at home, reaching out for cans of soups at supermarkets or ordering them online in more numbers.
The company’s shares fell despite reporting a 21-per-cent surge in sales of soups alone in the United States.
Sales at the meals and beverages unit, which makes Pacific Foods soups and broths and Prego pasta sauces, rose 12 per cent.
Net earnings attributable to the company were US$309-million, or US$1.02 per share in the first quarter ended Nov. 1, up from US$166-million, or 55 US cents per share, a year earlier.
Net sales rose 7.2 per cent to US$2.34-billion, beating analysts’ average estimate of US$2.32-billion, according to IBES data from Refinitiv.
Prominent cybersecurity firm FireEye Inc. (FEYE-Q) fell after it said Tuesday it was hacked by what it believes was a national government.
The attacker targeted and stole assessment tools that FireEye uses to test its customers’ security and which mimic the methods used by hackers, the company said.
“I’ve concluded we are witnessing an attack by a nation with top-tier offensive capabilities,” FireEye CEO Kevin Mandia said in a statement. “This attack is different from the tens of thousands of incidents we have responded to throughout the years.”
The company didn’t identify who it thought was responsible. The stolen “Red Team” tools could be dangerous in the wrong hands, though FireEye said there’s no indication they have been used. The company said it has developed countermeasures to protect its customers and others.
Based in Milpitas, California, the publicly traded cybersecurity company has been on the front lines of investigating sophisticated hacking groups, including attempts tied to Russian groups to break into state and local governments in the U.S. that administer elections.
It said it is investigating the attack in co-ordination with the FBI and other partners such as Microsoft, which has its own cybersecurity team.
U.S. videogame retailer GameStop Corp. (GME-N) missed Wall Street estimates for quarterly revenue on Tuesday as pandemic-led store closures and intense competition from digital-game sellers hit sales.
The company’s shares were down as it said comparable store sales fell 24.6 per cent during the quarter.
A rise in the popularity of videogame streaming and surging digital downloads of console games have hit GameStop’s sales growth, with coronavirus-driven curbs heaping more pressure on the videogame retailer.
Still, GameStop said it “expects to realize positive comparable store sales results and profitability in the fourth quarter,” betting on holiday season sales as well as Microsoft and Sony’s new console launches.
The company did not provide a current-quarter forecast.
Net loss narrowed to US$18.8-million, or 29 US cents per share, in the third quarter ended Oct. 31, from US$83.4-million, or US$1.02 per share, a year earlier.
Excluding items, it posted a loss of 53 US cents per share, while analysts had expected a loss of 85 US cents per share, according to IBES data from Refinitiv.
Revenue fell 30 per cent to US$1-billion, missing analysts’ estimates of US$1.09-billion.
With files from staff and wires
David Leeder