A roundup of some of the North American equities making moves in both directions
On the rise
National Bank of Canada (NA-T) saw gains on Wednesday after it reported a 25-per-cent rise in first-quarter profit as financial markets led a series of strong results from each of the bank’s core business lines.
National Bank is the fourth bank this week to handily beat expectations after Royal Bank of Canada, Bank of Nova Scotia and Bank of Montreal reported profits that rebounded above prepandemic levels. Each of the four banks has benefitted from strong capital markets returns and steady improvements in retail banking, as well as a decline in provisions for credit losses - the funds banks set aside to cover loans that may go bad.
In its fiscal first quarter, which ended Jan. 31, the Montreal-based bank earned $761-million, or $2.15 per share, compared with $610-million, or $1.67 per share, in the same quarter last year.
On average, analysts expected earnings per share of $1.73, according to Refintiv.
“Another strong beat, in a very similar vein to peers,” said John Aiken, an analyst at Barclays Capital Canada Inc., in a note to clients.
Sierra Wireless Inc. (SW-T) rose after reporting better-than-expected fourth-quarter results after the bell on Tuesday.
The Vancouver-based company reported revenue of US$120.5-million, down 4 per cent year-over-year but above the Street’s US$117-million projection. An adjusted EBITDA loss of US$2.9-million also topped expectations (a loss of US$5-million).
Raymond James analyst Steven Li said: “With the divestiture of the auto module business complete, SWIR is cashed up ($150-million net cash after the expected burn in 1Q) and all set to pivot towards as stronger business model (more recurring services, higher margin). A very tight component supply chain continues to weigh on revenues. Management provided in-line guidance for 1Q (would have been 15 per cent higher in a normalized environment given order book).”
Trican Well Service Ltd. (TCW-T) jumped with the release of a fourth-quarter earnings beat after market close on Tuesday.
In a research note, Raymond James analyst Andrew Bradford said: “Trican reported a solid beat on 4Q. Headline EBITDA in 4Q was $14.5-million on $103-million revenue - both handily ahead of the consensus estimates. Adjusting for the benefit of government subsidies and other one-time items, adjusted-EBITDA was $12-million in 4Q, also a beat vis-a-vis our $9.1-million estimate.
“By all measures, the momentum has continued into 1Q21 - January ramped-up quickly and all 6 of TCW’s active crews have been employed to this point. Further, we can easily envision demand picking up further following the breakup months as WTI tests the waters above $60. At a minimum, the macro dynamic has substantially de-risked our high-on-the-street 2021 and 2022 EBITDA estimates.”
Oil and gas producer Crescent Point Energy Corp. (CPG-T) rose after it posted a higher fourth-quarter profit on Wednesday compared to the third, as commodity prices rebounded from pandemic lows.
Crescent’s adjusted net earnings from operations were $85.6-million, or 16 cents per share, in the quarter ended Dec. 31, compared with $71-million, or 13 cents per share, in the third quarter.
High Liner Foods Inc. (HLF-T) gained after saying it earned a profit in its latest quarter compared with a loss a year ago even as its sales declined.
The frozen seafood company says it earned US$7.4 million or 21 US cents per share for the quarter ended Jan. 2, compared with a loss of US$3-million or nine cents per share a year earlier.
Sales for the quarter fell to US$198.4-million compared with US$221.6-million for the fourth quarter of 2019.
Sales volumes totalled 59.6 million pounds, down from 59.7 million pounds.
On an adjusted basis, High Liner says it earned 29 US cents per share for its most recent quarter, up from an adjusted profit of 17 US cents per share a year earlier.
Analysts on average had expected an adjusted profit of 28 US cents per share and $213 million in revenue, according to financial data firm Refinitiv.
Exxon Mobil Corp. (XOM-N) increased after it said on Wednesday it would sell its non-operating interest in its UK and North Sea exploration and production assets to private-equity fund HitecVision for more than US$1-billion.
Exxon has been looking to sell its oil and gas assets since late 2019, seeking to free up cash to focus on a handful of mega-projects.
The deal includes ownership interests in 14 producing fields operated primarily by Shell as well as interests in the associated infrastructure. Exxon could also receive about US$300-million in contingent payments based on a potential for increase in commodity prices.
Exxon’s share of production from these fields was about 38,000 barrels of oil equivalent per day in 2019, the company said.
Exxon said it would retain its non-operated share in upstream assets in the southern part of the North Sea as well as its interest in the Shell Esso gas and liquids (SEGAL) infrastructure, which supplies ethane to the company’s Fife ethylene plant.
HitecVision, in partnership with Eni, had bought Exxon’s Norwegian North Sea assets for US$4.5-billion in 2019.
GameStop Corp. (GME-N) soared in late trading, finishing up almost 104 per cent on the day.
Volume was more than two times the 10-day moving average, and shares were halted by the New York Stock Exchange. AMC Entertainment Holdings (AMC-N) also jumped.
Late Tuesday, the retailer announced Chief Financial Officer Jim Bell will step down next month as it focuses on shifting into technology-driven sales in the wake of headline-grabbing big betting in its stock.
GameStop said Mr. Bell’s resignation was not due to any disagreement with the company relating to its operations, including accounting principles and practices.
However, a source said that while Mr. Bell’s exit was unrelated to the recent wild swings in GameStop’s stock spurred by retail traders on the Reddit social media site, his departure was initiated by the company.
The source, a person familiar with the firm’s thinking, said GameStop had become dissatisfied with Bell as it works to transform into a technology-oriented business and was not confident he would be the right CFO moving forward.
Mr. Bell, who will leave the company on March 26, previously worked at brick-and-mortar retailers Gap Inc and Coldwater Creek and restaurant chain P. F. Chang’s China Bistro, according to his LinkedIn profile. He did not respond to requests for comment.
On the decline
Royal Bank of Canada (RY-T) closed lower after its first-quarter profit increased by 10 per cent as earnings from capital markets surged and the bank set aside less money to absorb potential losses on loans.
The country’s largest bank reported just $110-million in provisions for credit losses, down 74 per cent from the same quarter a year ago. RBC recovered $97-million that had previously been set aside in case loans that were still performing went bad, which helped offset some of the new funds earmarked in the first quarter to cover loans that are impaired.
Declining loan loss provisions are a sign that RBC believes it has built an adequate cushion to absorb future losses from the crisis created by the novel coronavirus, and the easing pressure on credit portfolios has helped push banks’ quarterly profits back above prepandemic levels. On Tuesday, Bank of Nova Scotia (BNS-T) and Bank of Montreal (BMO-T) both beat analysts’ expectations, helped in part by lower provisions.
In its fiscal first quarter, which ended Jan. 31, RBC reported profit of $3.85-billion, or $2.66 per share, compared with $3.51-billion, or $2.40 per share, in the same period a year ago.
Adjusting for special items, RBC said it earned $2.69 per share, well ahead of the $2.27 consensus estimate among analysts, according to Refinitiv.
- James Bradshaw
Bausch Health Companies Inc. (BHC-T) slipped after it agreed to add two directors from Icahn Group to its board, weeks after activist investor Carl Icahn disclosed a nearly 8-per-cent stake in the Canadian drugmaker.
The new members - Bret Icahn, Carl’s son, and Steve Miller, both portfolio managers at Icahn Capital LP - will be appointed to committees including those assisting with the potential spinoff of Bausch’s eye health business.
Bausch, which has sought to get past a flurry of investigations into its accounting and pricing practices under its previous management, said in August it would spin off its eye care unit, Bausch + Lomb, into a separate publicly listed company.
Since its purchase in 2013, Bausch + Lomb has been a stable source of revenue for the company, especially after the accounting issues led to a steep fall in the share price of the one-time Wall Street darling, compounded by concerns over Bausch’s large debt pile.
Shares of the company fell 32 per cent in 2020.
Earlier this month, Glenview Capital Management, which holds a 4.6-per-cent stake in Bausch Health, in a letter to the drugmaker’s chief executive, said that details of the plan for the spinoff were “both vague and suboptimal” and called for the separation to be completed by year-end 2021.
Separately, Bausch Health posted a narrower fourth-quarter loss helped by an uptick in demand for its contact lenses, Bausch + Lomb.
Hydro One Ltd. (H-T) was narrowly lower after reporting its fourth-quarter profit fell compared with a year earlier as the power utility faced higher costs related to the pandemic.
Hydro One says it earned net income attributable to common shareholders of $161-million or 27 cents per diluted share for the quarter ended Dec. 31, compared with a profit of $211-million or 35 cents per diluted share a year earlier.
In addition to COVID-19 related expenses, the company says it saw a reduction in insurance proceeds, higher depreciation and asset removal costs and higher taxes.
Revenue for the quarter totalled $1.87-billion, up from $1.72-billion.
On an adjusted basis, Hydro One says it earned 27 cents per diluted share, down from 35 cents per diluted share in the fourth quarter of 2019.
Analysts on average had expected a profit of 29 cents per share, according to financial data firm Refinitiv.
Lowe’s Cos Inc. (LOW-N) was down despite riding a sustained boom in demand from people sprucing up their homes as a result of the COVID-19 pandemic, exceeding analyst estimates with quarterly sales of US$20.31-billion.
However, the home-improvement chain, like larger rival Home Depot Inc, stayed away from providing a specific forecast for 2021, given the uncertainties in the market due to the health crisis.
Lowe’s and Home Depot have been among the biggest retail winners last year as Americans, unable to spend on travel or leisure activities, put more money into minor remodeling and repair works at their homes.
Same-store sales for Lowe’s rose 28.1 per cent in the fourth quarter ended Jan. 29, beating analysts’ estimates for a 21.2-per-cent increase, according to IBES data from Refinitiv. Larger rival Home Depot reported a 24.5-pe-cent gain on Tuesday.
The roll out of vaccines and the promise of a return to something closer to normal life, however, have raised expectations of slowing sales growth in 2021.
Lowe’s on Wednesday reiterated its December outlook when it provided a range of scenarios for 2021. Even a “robust” year for the home-improvement space would mean demand being down 5 per cent to 7 per cent, Lowe’s had said. It expects to outperform the home-improvement market by 300 to 400 basis points.
U.S. discount store operator TJX Cos Inc. (TJX-N) missed holiday-quarter sales estimates on Wednesday, as coronavirus-induced lockdowns in Europe and Canada pressured sales of non-essential products such as footwear and apparel, sending shares down.
TJX owns the Winners, HomeSense and Marshalls chains in Canada.
Sales of retailers that sell discretionary items have remained pressured since the onset of the pandemic, as declining income among households have prompted people to cut their spending on dresses and suits.
A resurgence in COVID-19 cases and ensuing lockdowns also meant off-price chains, which bring in only a fraction of sales from their online channels and rely largely on the treasure hunt shopping experience, suffered yet another blow.
TJX estimated that temporary store closures in Europe and Canada negatively impacted its fourth-quarter sales by about US$950-million to US$1.05-billion.
Net sales fell to US$10.94-billion in the quarter ended Jan. 30, from US$12.21-billion a year earlier. Analysts had expected sales of US$11.48-billion, according to IBES data from Refinitiv.
Net income fell to US$325.5-million, or 27 US cents per share, from US$984.8-million, or 81 US cents per share, a year earlier.
With files from staff and wires