Many major U.S. and Canadian companies found multiple ways to disappoint investors Wednesday evening, with many stocks missing expectations for second-quarter results or issuing weak outlooks. Facebook, should post-market indications hold, could lose nearly a quarter of its market capitalization on Thursday. Canadian gold producers are poised for a rough day as well after revealing disappointing results, and uranium producer Cameco is set to take a major hit after announcing lacklustre results and a decision to keep production suspended at its McArthur River and Key Lake mines indefintely.
Shares of Facebook Inc., which had recovered from the Cambridge Analytica scandal to post all-time highs, reversed course on Wednesday evening, plunging more than 20 per cent in after-market trading. The company’s monthly active user numbers were up, but not up as much as analysts expected, and revenue of US$13.23-billion fell short of average expectations of US$13.36-billion, according to Thomson Reuters I/B/E/S. Executives later warning that revenue growth would slow and expenses would rise further dented sentiment for the stock.
PayPal Holdings Inc. beat second-quarter earnings expectations, but a soft forecast for third-quarter revenue sent the shares down in after-market trading. The money-transfer company said it expected sales in the range of US$3.62-billion to US$3.67-billion, versus average analysts’ estimates of $3.71-billion. The company’s 58 cents of second-quarter earnings a share topped expectations of 57 cents. Shares dipped more than 3 per cent soon after U.S. markets closed Wednesday evening.
Ford Motor Co., which hit a 52-week low in Wednesday trading, also fell in the after-market when it posted earnings a share of 27 cents, versus expected EPS of 31 cents, according to Thomson Reuters I/B/E/S. The profit, damaged by a fire at a parts supplier that disrupted production of its popular pickup trucks, was down by more than half from 2017’s second quarter.
Mattel Inc. was another big after-market loser, falling 7 per cent as it missed sales estimates, blaming the liquidation of Toys "R" Us and the lack of a big movie tie-in. The company also said that it will cut 2,200 jobs, or 22 per cent of its global non-manufacturing work force, and plans to sell factories in Mexico, as part of a US$650-million cost-saving program. Mattel’s net sales fell 13.7 per cent to US$840.7-million in the second quarter ended June 30, short of the US$851.8-million analysts had expected, according to Thomson Reuters I/B/E/S.
Two chip makers went against the grain and gained.
Advanced Micro Devices Inc. beat expectations for EPS – 14 US cents, versus 13 US cents – and revenue of US$1.76-billion was more than the consensus of US$1.72-billion. Investors rewarded the shares by pushing them up nearly 4 per cent in Wednesday evening trading.
Qualcomm Inc. reported quarterly adjusted earnings of 75 cents a share, versus mean expectations of 71 cents a share. Revenue fell 3.3 per cent to $5.13-billion from a year ago; analysts expected $5.19-billion. The company also said it would terminate its deal to buy NXP Semiconductors NV. Shares were up more than 5 per cent after-market.
Visa Inc. shares were up mildly as the world’s largest payments network, topped analysts’ estimates for third-quarter profit. Visa’s earnings a share of $1.20 beat analysts’ average estimate of $1.09, according to Thomson Reuters I/B/E/S.
A host of Canadian mining companies released numbers on Wednesday evening.
Barrick Gold Corp., fresh off the news that president Kelvin Dushnisky was decamping for rival AngloGold Ashanti, posted adjusted earnings a share of 7 US cents, versus analyst expectations of 11 US cents, on US $1.71-billion in revenue, versus expectations of US$1.74-billion. The company’s New York Stock Exchange-traded shares were down slightly on Wednesday evening.
Goldcorp Inc. reported a loss of 15 US cents versus an expectation of profit of 7 cents. The company had 20 US cents of non-cash foreign exchange losses in the quarter.
Agnico Eagle Mines Ltd. missed, posting earnings a share of 1 US cent, versus expectations of 7 US cents. Revenue of US$556.3-million topped expectations of US$539.56-million.
In Canada’s energy sector, Suncor Energy Inc. Wednesday night reported a quarterly profit that beat analyst expectations but the company cut the top end of its full-year production guidance following a power outage at its majority-owned Syncrude oil project.
Canada’s second-largest oil producer said that it would now produce 740,000 to 750,000 barrels of oil equivalent per day (boepd), down from the earlier outlook of between 740,000 and 780,000 boepd. Suncor said its operating profit, which excludes one-time items, jumped 22.4 per cent to C$1.19 billion, or 73 Canadian cents per share in the quarter. Analysts had predicted earnings of 67 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Thursday morning features earnings from energy companies across the globe, with Cenovus Energy Inc. leading Canadian names.
Cenovus is selling investors on a comeback story under new CEO Alex Pourbaix, who’s trying to reverse the negative sentiment from an unpopular 2017 acquisition of assets from ConocoPhillips. Mr. Pourbaix, who inherited a company last October with $9.51-billion in long-term debt, is giving himself until 2019 to turn Cenovus around and bring that figure down.
Investors wiped out about a fifth of the Calgary-based company’s market value when it bought ConocoPhillips' oil-sands assets for $17-billion last year. Shares are now up about 51.4 per cent after plunging to a record low in February.
For the second quarter, analysts estimate, on average earnings a share of 3 cents on revenue of just more than $5.25 billion. Cenovus’ earnings a share has been deeply difficult to predict, with the smallest surprise of the past eight quarters a 39 per cent beat in 2017’s first period. (That analyst consensus has typically been just a few cents a quarter makes the hits and misses all the bigger, in percentage terms.)
Cenovus is joined on Thursday morning by Crescent Point Energy, Husky Energy and Precision Drilling, as well as miner Teck Resources.
Crescent Point is coping with activist shareholder Cation Corp.’s agitations once again. The investor, which mounted an unsuccessful proxy contest in the spring, said on Wednesday morning it had asked Crescent Point to meet and receive its feedback on strategy and its CEO search prior to a July 25 board meeting. Crescent Point declined, Cation says. Crescent Point said in May CEO Scott Saxberg would depart after 15 years.
Analysts expect, on average, 7 cents of earnings a share for Crescent Point’s second quarter on revenue of just less than $990-million.
Husky Energy is expected to report 34 cents of earnings a share on just less than $6.02-billion in revenue. Precision Drilling is expected to post a loss of 14 cents a share on just less than $320-million in revenue. Analysts expect Teck to post $1.07 in earnings a share on revenue of just less than $2.95-billion.
Global energy giants Royal Dutch Shell, ConocoPhillips and Marathon Petroleum are all on the Thursday-morning calendar as well. ConocoPhillips is expected to report a 11.8-per-cent increase in revenue to US$9.38-billion from US$8.88-billion a year ago, according to the mean analyst estimate. The company is expected to post $1.08 in EPS versus 14 cents in the prior-year quarter.
Other major global names reporting Thursday morning include American Airlines Group Inc. and Southwest Airlines Co.; Ambev SA, Comcast Corp., Nokia Corp., Xerox Corp., Allergan plc and Altria Group Inc.
With files from Reuters
David Milstead