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A roundup of some of the North American equities making moves in both directions today

Aecon Group Inc. (ARE-T) rose 5.3 per cent on Wednesday after reporting better-than-expected fourth-quarter financial results on Tuesday after market close.

The Toronto-based construction and infrastructure development company said revenue for the period came in at $948.5-million, rising from $685-million a year earlier and ahead of the Street’s consensus expectation of $775.1-million. Profit was $27.9-million up from $21.1-million a year earlier.

Aecon raised its quarterly dividend by 2 cents to 14.5 cents per share.

In a research note released Wednesday morning, Raymond James analyst Frederic Bastien said: “We still view Aecon Group as the contractor to own post solid 4Q18 results. The firm is working off a record backlog of mass transit and nuclear power refurbishment work in Eastern Canada, and ideally positioned on all major pipelines earmarked for construction in Western Canada. Aecon’s also sitting on a pile of cash following the sale of its contract mining assets, giving it the flexibility to invest in long-term concessions, pursue bolt-on acquisitions and return more to its shareholders. For proof consider that the Board just approved a 16% increase in the quarterly dividend to $0.145 per share, for an implied yield in excess of 3%. In spite all of this, the stock continues to trade well off its historical and peer group averages. From where we sit, there is plenty of upside left in Aecon.”

The Stars Group Inc. (TSGI-T) was up 13.3 per cent after reporting fourth-quarter results before market open.

The online gaming company reported an 81.2-per-cent rise in revenue year-over-year, which fell short of the Street’s estimates for the first time in at least the last eight quarters. The company’s earnings per share of 52 cents did beat the consensus projection by 8 cents.

“2018 was a landmark year for the company," said CEO Rafi Ashkenazi. "We completed the acquisitions of Sky Betting & Gaming in the U.K. and BetEasy in Australia, extended our licensed footprint to 21 jurisdictions around the world and began laying the foundations to grow our presence in the U.S.

"Our International business saw strong organic growth in the year despite restrictions in certain markets and lapping the initial roll-out of our Stars Rewards program. Our United Kingdom and Australia segments both performed in-line with our expectations during the fourth quarter, and we believe they are currently well-positioned to continue gaining market share in 2019.”

Fitbit Inc. (FIT-N) sat 1.9 per cent higher after launching its cheapest smartwatch on Wednesday.

Fitbit said the Versa Lite smartwatch will cost US$160, versus US$200 for the full version. The San Francisco-based company also unveiled three other wearable products.

CanWel Building Materials Group Ltd. (CWX-T) rose 0.3 per cent after it reported fourth-quarter revenues decreased by 4.4 per cent year-over-year to $264-million. The result did top the Street’s projection of $268.1-million. Adjusted EBITDA of $8.9-million was a drop from $13.4-million in 2017 but also exceeded the consensus estimate of $7.3-million.

“Despite an ongoing weak pricing environment for lumber, OSB and panel products during the fourth quarter, we are pleased with our ability to generate strong EBITDA results in relative terms,” said chairman Amar Doman. “We are encouraged by the recovery in the pricing environment so far in early 2019, from the lows which we saw in late 2018 and remain confident in CanWel’s growth opportunities and further value creation while we continue to pay an attractive dividend to our shareholders.”

On the decline

Baytex Energy Corp. (BTE-T) fell 2.5 per cent after its fourth-quarter financial results exceeding expectations on the Street.

Before market open, the company revealed cash flow per share of 20 cents, topping the consensus projection by 2 cents. Its production for the quarter of 98,900 barrels of oil equivalent per day was a jump of 42 per cent from the same period a year ago and above the consensus of 95,400 boe/d.

AltaCorp Capital analyst Thomas Matthews said: “In our view, the majority of the error was the disconnect between benchmark and company realized pricing due to heightened volatility in Q4, as Baytex’s marketing agreements tempered the reduction in realized heavy oil pricing. The stock reacted favorably on the open post Q3/18 earnings when Baytex reported a similar beat of consensus expectations, however, gains slowly decreased as the trading day progressed.”

Pengrowth Energy Corp. (PGF-T) lost 1.4 per cent after reporting weaker-than-anticipated fourth-quarter results.

Before market open, the Calgary-based company reported funds from operations of 0 cents, missing the consensus on the Street of 2 cents, due largely to lower-than-projected bitumen price realizations.

It also announced the launch of a strategic review “with a view to strengthening the Company's balance sheet and maximizing enterprise value.”

In a research note, Raymond James analyst Chris Cox said: “Unquestionably, the focal point of the story coming out of 4Q18 is going to be the strategic review process that was initiated during the quarter. Unfortunately, we see limited options available to the company within this M&A environment, although $2.3-billion of tax pools could make the story more interesting to a potential acquirer. Absent a potential takeover, equity appears to us like the most visible path to right-sizing the balance sheet. While we acknowledge the attractive economics of the Lindbergh project, the magnitude of the de-leveraging that we think is required for the company and the numerous risks that this presents keeps us on the sideline.”

U.S.-listed shares of Tilray Inc. (TLRY-Q) fell 1.3 per cent after the Canadian medical marijuana company announced that its wholly-owned subsidiary Tilray Portugal Unipessoal Lda (“Tilray Portugal”) has completed a successful harvest of medical cannabis at the its European Union (EU) campus in Portugal

“Our harvest in Portugal is an exciting milestone for the company as we continue to build our multinational supply chain of high-quality medical cannabis,” said Sascha Mielcarek, Tilray’s managing director of Europe, in a statement. “We look forward to utilizing the capacity of Tilray Portugal to supply the medical cannabis market in Europe as we expand our operations.”

Titan Medical Inc. (TMD-T) dropped 11.4 per cent after announcing Tuesday following market close that it has filed statements with regulators for an offering of units with the expectation of raising between US$20-million and US$25-million. Each unit will comprise one common share of the company and one common share purchase warrant.

The Toronto-based medical device company aims to use the funds to continue development work on its SPORT surgical system as well as working capital and other general corporate purposes.

Stuart Olson Inc. (SOX-T) fell 15.3 per cent after releasing lower-than-anticipated fourth-quarter results.

The construction and industrial services company reported contract revenue of $227.6-million, down from $282.6-million a year ago and below expectations of $244.6-million. Adjusted EBITDA of $7.2-million compared to $11.5-million a year earlier.

“Against a backdrop of increased competition and a significant spending slowdown across our key Western Canadian markets due to historically wide oil price differentials, Stuart Olson added approximately $825 million to its consolidated backlog, acquired an accretive complementary mechanical MRO provider, and maintained a healthy balance sheet in 2018,” said president and CEO David LeMay.

"While these accomplishments were offset by weak financial results for the fourth quarter, we enter 2019 with a positive outlook for contract revenue and adjusted EBITDA growth on a full-year basis, with much of this growth expected to come in the second half of the year. This is due to a number of factors, including our current project mix and stage of completion, the near-term negative impacts of the mandatory Alberta oil production curtailment on capital spending by our integrated oil sands customers, which are abating, and the fact that our operating groups are actively bidding on a significant number of federal and provincial infrastructure projects."

Great Canadian Gaming Corp. (GC-T) fell 6.9 per cent in the wake of weaker-than-anticipated fourth-quarter results and a decline in its first-quarter financial expectations, which led several equity analysts on the Street to lower their target prices for its stock.

Canaccord Genuity’s Derek Dley said: “We believe the robust capital expenditure guidance for 2019 points to an acceleration of EBITDA and FCF capture from Great Canadian’s development initiatives, which should outweigh the near-term softness in results.”

Step Energy Services Ltd. (STEP-T) dropped 13.2 per cent on weaker-than-anticipated quarterly results, which it blamed, in part, on “extreme commodity price volatility and significantly reduced activity levels.”

The company also announced it reduced its administrative staff by 13 per cent in early 2019 and field staff by 12 per cent since the end of the third quarter.

“In the context of the headwinds encountered by the industry in the fourth quarter, we are encouraged with our 2018 results - particularly in the U.S. where our team has done a fantastic job of securing work at a time where competition remains high. Reduced customer activity levels have required us to right-size our asset base and reinforce processes to reduce costs across the organization; sadly, this includes sending some of our professionals home." said president and CEO Regan Davis. “We continue to focus on the balance sheet and opportunities to optimize our capital structure and believe that our long-term focus on returns will add value on a per share basis.”

Shares of General Electric Co. (GE-N) continued to fall on Wednesday, dipping 8 per cent a day after warning of a negative net cash flow from its industrial businesses this year.

“Industrial free cash flow will be (in) negative territory,” compared with a positive $4.5 billion last year, CEO Larry Culp said in a webcast interview with JPMorgan analyst Stephen Tusa,

With files from staff and wires

Follow David Leeder on Twitter: @daveleederOpens in a new window

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