A roundup of some of the North American equities making moves in both directions today
On the rise
Loblaw Companies Ltd. (L-T) rose on Wednesday after it beat market estimates for quarterly revenue and profit, as homebound consumers shopped more for groceries and other essentials online during the COVID-19 pandemic.
Demand for essential products and groceries surged during lockdowns and other virus-related restrictions that included limiting store capacity and temporarily curbing sale of non-essential products in parts of Canada during the first three months of the year, pushing consumers to stockpile.
Online sales more than doubled in the quarter for the retailer.
Net earnings available to common shareholders rose to $313-million, or 90 cents per share, in the quarter ended March 27 from $240-million, or 66 cents per share, a year earlier.
Excluding one-time items, Loblaw earned $1.13 per share, beating the average analyst estimate of 87 cents per share.
Revenue rose to $11.87-billion in the first quarter from $11.80-billion a year earlier, surpassing analysts’ estimates of $11.72-billion, according to IBES data from Refinitiv.
In a research note, Desjardins Securities analyst Chris Li said: “About 40 per cent of the outperformance came from financial services, with the other 60 per cent from food & drug (mainly due to better-than-expected gross margin). While it’s too early to update its 2021 outlook, L noted that given the strong momentum in 1Q which carried over into the first four weeks of 2Q, it should exceed its full-year EPS growth outlook of 10–15 per cent. Consensus is forecasting 14 per cent ($4.67) and we expect estimates to go up.”
Barrick Gold Corp. (ABX-T) saw gains after it reported a 78-per-cent jump in first-quarter profit on Wednesday, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.
Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia.
Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.
Adjusted profit rose 78 per cent to $507-million in the quarter ended March 31, from $285-million a year earlier, and Barrick announced a 9 cent per share quarterly dividend.
Chorus Aviation Inc. (CHR-T) increased in the wake of announcing it has signed a three-year contract with Purolator Inc. for air cargo charter services.
The agreement follows the completion of an initial six-month trial.
Purolator says the deal complements its existing network and will mean more service options for cross-border shipments.
Chorus is best known for its Jazz Aviation subsidiary which provides regional air service for Air Canada, but chief executive Joe Randell says air cargo is a growing area of focus.
Under the agreement, Chorus subsidiary Voyageur Aviation Corp. will replace two Dash 8-100 Simplified Package Freighters used for the trial service with two Dash 8-100 Package Freighters.
Voyageur designed and developed the Dash 8-100 PF which can carry a typical payload of 4,500 kilograms and 39 cubic metres.
Stelco Holdings Inc. (STLC-T) soared after reporting a triple-digit improvement in adjusted EBITDA and net income in the first quarter.
The Hamilton-based company announced operating and adjusted net income of $166-million and $155-million, respectively, up 328 per cent and 243 per cent from the fourth quarter. Adjusted EBITDA of $185-million represented a jump of 208 per cent.
Chief Financial Officer Paul Scherzer said Stelco could generate adjusted EBITDA “in excess” of $2-billion in 2021.
Equitable Group Inc. (EQB-T) rose after releasing better-than-expected first-quarter results and an increase to its full-year guidance after the bell on Tuesday.
The Toronto-based financial services firm reported earnings per share of $3.23, up 89 cents higher versus the same quarter last year and above the consensus forecast on the Street of $2.93.
Raymond James analyst Stephen Boland said: “The higher than expected earnings was due to $3.1 million of PCLs that were released as a result of the improved economic outlook and investment gains. ROE for the quarter was 17.1 per cent with the NIM gradually improving over the past 3 quarters. Management has increased loan growth guidance for the year and positive objectives of 12-15-per-cent EPS growth and an ROE of 15-17 per cent for the next 3 years. Management believes the possible change to the stress test could be positive for their results. Finally, with the positive outlook on the stock, we are increasing our target price to $148 [from $147] and maintaining our Outperform rating.”
The Calgary-based company reported production of 80,540 barrels of oil equivalent per day, topping the Street’s projection of 74,900 boed. It now expects 2021 production of 80-82,000 boe/d, up from 77-80,000 boe/d and again above the consensus estimate (79,100 boe/d).
Paramount also raised its capital spending guidance to $265-$285-million from $230-260-million, versus the Street’s forecast of $275-million
“Overall, we view the event as positive, with very strong quarterly results relative to expectations, attractive asset sale metrics announced for Birch and incrementally positive guidance, in our view,” said ATB Capital Markets analyst Patrick O’Rourke.
Its announcement included the securing of a location for its stack manufacturing and product development centre in Massachusetts with an expected nameplate manufacturing capacity of 1.4 GWh per year.
General Motors Co. (GM-N) posted far stronger-than-expected first-quarter profit despite a global semiconductor chip shortage as it held down costs and focused on high-margin pickup trucks and SUVs.
The Detroit automaker, whose shares were up, also said its full-year pre-tax profit would come in at the high end of its forecast.
“The speed and agility of our team are front and center as we move from managing through a pandemic to managing the global semiconductor shortage,” Chief Executive Mary Barra said in a letter to shareholders. “This remains a challenging period for the company as we emerge from 2020.”
Ms. Barra added the No. 1 U.S. automaker was focused on “maximizing production of high-demand and capacity-constrained vehicles” like the full-sized Chevrolet Silverado pickup, and GMC Yukon, Chevy Suburban and Cadillac Escalade SUVs.
Ms. Barra said on a conference call with reporters that the chip shortage will worsen in the second quarter before starting to improve in the second half of the year..
The No. 1 U.S. automaker posted a first-quarter net profit of $3 billion, or $2.03 per share, up from $294 million or 17 cents per share a year earlier. Excluding items, the company earned $2.25 per share, well above analyst expectations of $1.04 per share.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM-N) rose after Reuters reported it is planning to build several more chipmaking factories in the U.S. state of Arizona beyond the one currently planned.
TSMC, the world’s largest contract chipmaker, announced in May 2020 it would build a US$12-billion factory in Arizona, an apparent win by the Trump administration in its push to wrestle global tech supply chains back from China.
TSMC is setting up a 12-inch wafer fabrication plant in Phoenix, and the facility is expected to start volume production in 2024, Taiwan’s investment commission of the ministry of economic affairs, which approved the investment, said in December.
TSMC manufactures the bulk of its chips in Taiwan and has older chip facilities in China and the U.S. state of Washington.
Three sources familiar with the matter, speaking on condition of anonymity as they were not authorized to speak to the media, told Reuters that up to five additional fabs for Arizona are being planned.
On the decline
Kinaxis Inc. (KXS-T) was lower after narrowly beating expectations for its first-quarter results and reaffirming its guidance for 2021.
Late Tuesday, the Ottawa-based tech firm reported revenue of $57.7-million, up 9 per cent year-over-year and ahead of the consensus projection on the Street of $57.4-million. It expects 2021 revenue of $242-247-million, or 8-10-per-cent growth.
“We like the EBITDA beat but we suspect investors would have traded it for better growth,” said Robert Young, an equity analyst at Canaccord Genuity. “We would sum Q1 up as a blasé quarter with some positive signs before the call. Kinaxis did highlight improvement in bookings momentum and record new logo adds/subscription wins (for a Q1), which may offset some concern on slowed contract approval processes and delays leading to lower subscription growth than expected pre-pandemic. We believe Kinaxis provides a strong combo of revenue growth and EBITDA, even at dampened levels in 2021, a pristine balance sheet and a blue chip client roster. We expect growth to rebound in 2022 as bookings recover and as the subscription term hits a stronger year in its 3-year cadence.”
The food processing company says the profit amounted to 38 cents per diluted share for the quarter ended March 31 compared with a loss of $3.7-million or three cents per diluted share in the first three months of 2020.
Maple Leaf says its most recent quarter included a net gain of $26.7-million from non-cash fair value changes in biological assets and derivative contracts compared with a loss of $36.7-million in the same quarter last year.
On an adjusted basis, Maple Leaf says it earned 26 cents per share for the quarter, up from an adjusted profit of 21 cents per share a year ago.
Sales for the quarter totalled $1.05-billion, up from $1.02-billion in the same quarter last year.
The company’s meat protein group sales totalled $1.01-billion, up from $981.4-million a year ago, while the plant protein group sales amounted to $42.6-million, down from $46.3-million in the first quarter of 2020.
Badger Daylighting Ltd. (BAD-T) was down after the release of weaker-than-expected first-quarter results.
After the bell on Tuesday, the Calgary-based provider of nondestructive hydrovac truck excavating services reported revenue of $108-million, down 20.6 per cent year-over-year and 26 per cent from the same period in 2019. The Street had forecasted $126.5-million.
Adjusted EBITDA slid 69.7 per cent year-over-year to $5.5-million, well below the consensus projection of $21-million.
“Overall a disappointing quarter for BAD with results coming in well below both our estimates and consensus,” said Acumen Capital’s Trevor Reynolds. “While we believe that activity levels are normalizing, no near-term guidance is being provided.”
Hilton Worldwide (HLT-N) on Wednesday posted quarterly results below estimates as a rise in COVID-19 cases and tighter travel curbs in parts of Europe and Asia hurt bookings, sending shares of the U.S. hotel operator down more.
Analysts expect hotels to rebound strongly in the second half of this year but remain reserved about how quickly demand would pick up for business travel, on which major chains including Hilton and rival Marriott rely heavily.
Hilton said it suspended operations at 275 properties, mostly in the United States and Europe, during the first quarter due to the pandemic, compared with about 730 properties a year earlier.
The company said it has seen “meaningful improvement” in bookings in March and April as coronavirus vaccination rates rise and more people feel confident about traveling again.
Hilton’s revenue per available room (RevPAR) - a key measure for a hotel’s top-line performance - fell more than 38 per cent to US$46.23 in the quarter ended March 31 from a year earlier. That, however, was an improvement from US$40.68 in the prior quarter.
Jefferies analyst David Katz said he expects Hilton’s results to continue to improve in the United States and China through the second quarter and in Europe by the second half of the year.
“Both of these non-U.S. regions are recovering more gradually due to vaccine-related challenges,” Mr. Katz said in a note.
On an adjusted basis, Hilton gained 2 US cents per share, missing analysts’ average estimate for a profit of 8 US cents per share, according to Refinitiv data.
Peloton Interactive Inc. (PTON-Q) plummeted after it said on Wednesday it was recalling its Tread and Tread+ treadmills, reversing course after Chief Executive Officer John Foley earlier urged owners of its machines only to check safety warnings following the death of a child in an accident.
The U.S. Consumer Product Safety Commission (CPSC) in April warned consumers about the dangers of Peloton’s Tread+ treadmills after reports of dozens of incidents of children being sucked beneath the treadmill.
In response, Peloton called CPSC’s warning about its Tread+ “inaccurate and misleading,” arguing there was no reason for children above 16 to stop using the machine.
“I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+,” Mr. Foley said in a statement.
“We should have engaged more productively with them from the outset. For that, I apologize.”
Lyft Inc. (LYFT-Q) was down despite surprising Wall Street with significantly lower losses than expected and said it would deliver dependable profit on an adjusted basis beginning in the third quarter thanks to cost cuts that allow the company to earn more per ride.
The results come as Lyft emerges from more than a year of pandemic-related restrictions during which ridership and revenue plummeted. The company said it expected a strong rebound in U.S. travel in the third quarter, when many homebound Americans who hunger for travel are likely to be fully vaccinated against COVID-19.
Lyft reported an adjusted US$73-million first-quarter loss before interest, taxes, depreciation and amortization - a metric that excludes more than US$300-million in one-time costs, including stock-based compensation.
That is significantly narrower than the US$144-million loss analysts had projected on average, according to Refinitiv data.
Lyft reaffirmed its goal to be profitable on the adjusted EBITDA metric in the third quarter of this year and said it would remain profitable beyond that time, even as the company invested in future growth opportunities.
With files from staff and wires