A roundup of some of the North American equities making moves in both directions today
On the rise
Ottawa-based e-commerce company Shopify Inc. (SHOP-T) increased just over 7 per cent after it beat analysts’ estimates for quarterly revenue and profit on Wednesday, as more brick-and-mortar businesses listed on the firm’s platform to cash in on the increase in number of people shopping online.
Online retailers have emerged as winners from coronavirus lockdowns and retain their appeal as people prefer to shop from their homes instead of making a trip to brick-and-mortar stores due to a resurgence in infections.
In June, Walmart Inc, the world’s biggest brick-and-mortar retailer, partnered with Shopify to ramp up its efforts to capture a bigger slice of that surge.
Shopify generates revenue by selling subscription to merchants looking to join its e-commerce platform and by charging them payment processing and transaction fees, as well as for logistics services.
New stores created on the platform jumped 71 per cent in the second quarter from the first quarter.
Shopify’s gross merchandise volume (GMV), a metric used to measure transaction volumes, more than doubled to US$30.1-billion in the quarter, largely helped by food, beverages, and tobacco categories. Analysts on average had estimated US$18.45-billion.
Enbridge Inc. (ENB-T) added 3.1 per cent after it posted a quarterly profit slightly higher than analysts’ estimates and said it sees volumes growing across the Mainline, North America’s biggest oil pipeline network.
Enbridge’s profit was 5 per cent lower than last year as it transported reduced oil volumes after a plunge in demand for gasoline and jet fuel, caused by pandemic-related lockdowns.
In May, Enbridge deferred $1-billion in capital spending as plummeting oil prices hammered the energy industry in Canada, the world’s fourth-largest crude producer.
Mainline throughput was 400,000 barrels per day (bpd) lower in the second quarter sequentially.
The company expects Mainline volumes to be under-utilized by 200,000 to 400,000 bpd in the third quarter and by 100,000 to 300,000 bpd in the fourth, before reaching full utilization in early 2021.
The company transported 2.44 million bpd of crude on its Mainline during the quarter, down from 2.66 million bpd last year.
IPL Plastics Inc. (IPLP-T) rose 48.8 per cent in the wake of announcing before the bell it has entered into an arrangement agreement to be acquired by Intelligent Packaging Limited Purchaser Inc., an entity controlled by funds managed by Chicago-based private equity firm Madison Dearborn Partners LLC.
Intelligent Packaging will acquire all of the issued and outstanding common shares of IPLP at $10.00 in cash per share, representing a 49-per-cent premium to the IPLP closing share price on July 28
The transaction values IPLP at $555-million on an equity basis and at $981-million on an enterprise basis.
Seven Generations Energy Ltd. (VII-T) rose 8.3 per cent after its second-quarter results, released before the bell, exceeded expectations.
ATB Capital Markets analyst Patrick O’Rourke said: “Overall, we view the event as positive, despite a difficult macro environment. While the Company cannot control the broader macro environment, the quarter highlights that where management does have control (risk management and capital/operating costs), performance has been very strong. The Company reiterated FY20 production guidance of 175-185 mboe/d, which now looks very achievable given YTD production of 188.4 mboe/d, and alluded to a FCF generating business model in 2021 (as well as a prudent focus on debt reduction), that we believe should be well received by investors.”
CGI Inc. (GIB.A-T) was 6.9 per cent higher after releasing third-quarter results before the bell that beat the Street.
The Montreal-based firm reported revenue and adjusted EBIT of $3.05-billion and $448-million, respectively, topping the consensus expectations of $2.98-billion and $427-billion.
Desjardins Securities analyst Maher Yaghi said: “CGI’s 3Q FY20 results were above expectations both in terms of bookings and financials even though growth decelerated meaningfully as this was the first quarter that entirely incorporated the pandemic. GIB’s valuation vs that of its peers has declined lately, but we believe today’s results could help reverse that trend. Management expects business conditions for its services to gradually improve through the rest of this year. Nonetheless, the company is still optimizing its operations further as it announced a restructuring designed to mitigate the impact of COVID-19. The cost of this program is expected to be $115-million, which we believe will be weighted toward western Europe; we anticipate this program should be beneficial to margins over the longer term.”
RioCan Real Estate Investment Trust (REI.UN-T) rose 2.5 per cent after swinging to a large loss in its latest quarter amid rent deferrals resulting from COVID-19 lockdowns.
The REIT says it collected about 73 per cent of rent due in April, May and June, calling the period “the most challenging quarter ever” for many tenants.
RioCan — which owns, manages and develops properties and counts major retailers among its tenants — said in a statement it expects rent collection to improve as businesses reopen, and that it collected 85 per cent of rent in July.
The company posted a net loss of $350.8-million or $1.10 per diluted unit for the three-month period that June 30, down from a net income of $253-million or 83 cents per unit a year earlier.
Funds from operations were slightly softer than analyst expectations. Per unit, funds from operations hit 35 cents per diluted unit, compared with 48 cents per diluted unit a year ago and 38 cents per unit expected by analysts polled by Refinitiv.
Mississauga-based Bird will pay $30-million in cash and $66.5-million of common shares. The deal is expected to close in the fourth quarter.
“The combination of our two businesses will create a company with substantially increased breadth and scale, diversified across services, end-markets and geographies,” said Bird President and CEO Terrance McKibbon. “In addition to combining two strong, experienced workforces, customers will benefit from a dynamic, integrated suite of construction services. The additional scale, leading technology platform and comprehensive service solution will position the company to deliver sustainable value and continuing dividends to shareholders. The combination of reduced interest expense and operating synergies is expected to generate accretion in operating cash flows and Adjusted Earnings Per Share in the first full-year.”
Shares of Calgary-based Stuart Olson were down 96.4 per cent.
Celestica Inc. (CLS-T) increased 11.4 per cent after it reported revenue of US$1.49-billion for the second quarter, which it said is an increase of 3 per cent compared to US$1.45-billion for the second quarter of 2019 “and was higher than anticipated.”
Analysts were expecting revenue of US$1.3-billion.
Earnings came in at US$13.3-million or 10 cents per share compared to a loss of US$6.1-million or 5 cents a year ago.
Starbucks Corp.’s (SBUX-Q) business is “steadily recovering” worldwide as most of the coffee chain’s stores have reopened with the easing of coronavirus-led restrictions, it said on Tuesday.
Shares of the Seattle-based company rose about 3.6 per cent after it said it would return to profitability in the current quarter on improving sales and margins.
Comparable store sales fell 40 per cent globally and 41 per cent in the Americas for Starbucks’ third quarter ended June 28. This was less than analysts’ forecast for declines of 42.05 per cent and 42.82 per cent respectively, according to IBES data from Refinitiv.
Starbucks, like many restaurants and coffee chains, took a big hit from government-imposed measures to curb the pandemic, prompting it to rely more on delivery and drive-thru services to make up for lost business.
More people used the chain’s drive-thru and delivery options to buy coffee and food, with mobile orders rising 6 percentage points from a year ago to make up 22 per cent of total transactions in the quarter.
Starbucks plans to deploy new handheld point-of-sale devices for employees to take orders in drive-thru lines to speed service. It will also roll out curbside pickup and a new plant-based protein box.
Eastman Kodak Co. (KODK-N) jumped over 317 per cent in the wake of news it will get a US$765-million loan from the U.S. government to produce pharmaceutical ingredients in the country, helping reduce dependency on other countries by strengthening domestic supply chains.
The U.S. International Development Finance Corp said on Tuesday it would sign a letter of interest to provide the loan to Kodak, a company known more for its cameras and imaging business.
The Trump administration has been looking to bolster the ability to produce drugs and their raw materials in the United States after the COVID-19 pandemic exposed the industry’s dependence on China and India for its supply chain.
“This is the beginning of American independence from our pharmaceutical dependence on foreign countries,” White House trade adviser Peter Navarro said in an interview with Fox Business network.
Advanced Micro Devices Inc. (AMD-Q) raised its full-year revenue forecast on Tuesday, driven in part by an overall surge in chip demand due to a global shift to work from home, and market-share gains from larger rival Intel Corp .
AMD’s shares jumped 12.5 per cent after it also forecast current-quarter sales above Wall Street targets. The stock has gained about 50 per cent this year through Tuesday’s close as investors cheered its success in next-generation chips, at a time when Intel faces delays in building the smaller, faster 7-nanometer chip technology.
AMD, which relies on outside foundries to make its chips, has started to take market share from Intel with offerings made on Taiwan Semiconductor Manufacturing Co Ltd’s 7-nm process technology.
On a conference call with analysts, AMD Chief Executive Officer Lisa Su said capacity for making 7-nm chips at TSMC factories was “tight” but that AMD believes it can meet demand as customers switch from Intel.
“The full-year raise is because demand has gone up from our initial expectations, and some of that is due to the market, and some of that is due to the strength of our product traction. We are increasing capacity to meet those needs. But it is tight,” Su said.
Visa Inc. (V-N) rose 0.7 per cent after its results topped analysts’ estimates on Tuesday with a 23-per-cent drop in quarterly profit as consumer spending continued to be pressured by high unemployment due to lockdowns aimed at curbing the coronavirus outbreak.
Net income fell to US$2.37-billion, or US$1.07 per Class A share, in the quarter ended June 30, from US$3.10-billion, or US$1.37 per Class A share, a year earlier.
Analysts had estimated, on average, that the company earned US$1.03, according to IBES data from Refinitiv.
The quarter was the first to reflect how spending on Visa transactions was impacted for three straight months by coronavirus-related shutdowns.
Visa said total payments volume decreased 10 per cent, on a constant dollar basis, and the number of process transactions declined 13 per cent from a year earlier.
Cross-border volume fell 37 per cent, reflecting the fall in international travel.
On the decline
First Quantum Minerals Ltd. (FM-T) sat 0.3 per cent lower after releasing second-quarter results after the bell on Tuesday that exceeded expectations on the Street.
The Vancouver-based mining and metals company reported adjusted EBITDA and earnings per share of $352-million and a 12-cent loss, respectively, beating the consensus expectation of $333-million and an 18-cent loss.
In a research note released before the bell, RBC Dominion Securities analyst Sam Crittenden said: " We expect a modest positive reaction from FM shares to Q2 results with EBITDA 2 per cent below our estimate but 6 per cent above consensus with a strong quarter at Sentinel. FM revised guidance for 2020 lowering the mid-point for copper & gold production by 4 per cent and 8 per cent respectively due to the delayed restart at Cobre Panama, which was expected and puts copper guidance inline with our estimates. Opex and capex guidance was unchanged. FCF was slightly positive at $25-million in the quarter, despite weaker volumes from Cobre Panama and a $97-million outflow from working capital. Cobre Panama was permitted to resume normal operations at the beginning of July after being placed on preservation and safe maintenance in April and the focus going forward, in our view, is the continued ramp up at the mine, with full production levels expected by mid-August.”
Cameco Corp. (CCO-T) lost 12.5 per cent in the wake of missing earnings expectations as it lost $53-million in the second quarter despite a 35-per-cent growth in revenues.
The Saskatoon-based uranium miner says it lost 13 cents per share for the period ended June 30, compared with a loss of six cents per share or $23-million a year earlier.
Chief executive Tim Gitzel says the proactive shutdown of operations because of the COVID-19 pandemic resulted in an additional $37-million in costs and increased reliance on the spot market for uranium supply.
The adjusted loss was $65-million or 16 cents per share, compared with a loss of $18-million or four cents per share in the prior year.
Revenues increased to $525-million from $388-million.
Cameco was expected to report an adjusted loss of five cents per share on $400.4-million of revenues, according to financial markets data firm Refinitiv.
Canadian pot producer Aphria Inc. (APHA-T) was down 18.7 per cent after it posted a bigger-than-expected quarterly loss and took impairment charges on some foreign assets, as coronavirus-related lockdowns disrupted tourism and supply chains.
Lack of profitability has been a major concern for cannabis investors as companies have largely failed to deliver on initial promises of boundless growth in the nearly two years since Canada legalized recreational marijuana.
However, net revenue rose more than 18 per cent to $152.2-million as the COVID-19 pandemic led customers to stockpile on cannabis ahead of the lockdowns.
The outbreak has also caused supply issues and delays in new product launches as companies scale back their workforce to essential employees only, while the absence of tourism-related dollars has also been a big worry for cannabis companies.
Aphria took impairment charges of $64-million in the quarter on the value of its assets in Jamaica, Lesotho, Colombia and Argentina.
The company reported a quarterly net loss of $98.8-million, or 39 cents per share, in the three months ended May 31, compared to a profit of $15.8-million, or 5 cents per share, a year ago.
On an adjusted basis, the company’s loss of 14 cents was much wider than analysts’ average expectation of 4 cents, according to Refinitiv IBES.
General Electric Co. (GE-N) was down 4.3 per cent as it reported smaller-than-expected cash outlflows in its industrial business on Wednesday, as the coronavirus crisis pummeled demand in its aviation business resulting in a $2.18 billion quarterly loss.
Free cash outflow from industrial operations totaled $2.1 billion, it said. The manufacturing conglomerate had previously predicted a cash outflow of between $3.5 billion and $4.5 billion for the second quarter.
GE said it expects to be cash flow positive in its industrial business in 2021.
The pandemic has brought global travel to a virtual halt and exacerbated troubles for GE’s once high-flying aviation unit that was already struggling with the grounding of Boeing’s 737 MAX planes, for which it makes engines.
Orders at the unit, GE’s largest by revenue, fell 56% and revenue fell 44% during the quarter.
Loss per share from continuing operations came in at 27 cents in the second quarter ended June 30, compared with 3 cents a year earlier. On an adjusted basis, GE reported a loss of 15 cents per share.
Boeing Co. (BA-N) declined 2.9 per cent after it slashed production on its widebody programs, delayed the arrival of its newest jet, and confirmed the demise of its iconic 747, as it reported a bigger-than-expected quarterly loss on Wednesday amid fallout from the COVID-19 pandemic.
The U.S. planemaker, which is also grappling with the 16-month-old ban on its 737 MAX after fatal crashes, delayed its timeline to hit build rates of 31 narrowbodies monthly to early 2022 from 2021, as the pandemic decimates new jet demand.
It now expects to resume 737 MAX deliveries to airline customers before year-end in the United States, a slip from earlier guidance of end-September. That means the jet’s U.S. return to service could slip to 2021.
The production cuts reflect concern among aviation companies across the board about the pace of the coronavirus recovery. Global airlines warned on Tuesday it would take a year longer than expected for air traffic to return to normal levels, with long-range travel hit harder than short hops.
The outbreak has crippled passenger travel and pushed major airlines to the brink of bankruptcy, resulting in many carriers deferring aircraft deliveries - when Boeing gets paid most of the money for new jets.
Boeing also confirmed the last 747, the iconic hump-topped jumbo jet that democratized global air travel in the 1970s but fell behind modern twin-engine aircraft, would roll out of its Seattle-area factory in around two years.
General Motors Co. (GM-N) slid 1.7 per cent on Wednesday posted a smaller-than-expected loss for the second quarter, as pickup truck sales and aggressive cost-cutting helped mitigate the impact of a forced shutdown to slow the spread of the coronavirus which left its North American plants idled until May 18.
The better-than-expected results sent the No. 1 U.S. automaker’s shares up 3.8 per cent.
“These results illustrate the resiliency and earnings power of the business as we make the critical investments necessary for our future,” Chief Financial Officer Dhivya Suryadevara said in a statement.
GM did not provide a earnings forecast for the year, but said it ended the second quarter with US$30.6-billion in cash.
The company said it was “working all avenues” to boost U.S. dealer inventories and all of its U.S. full-size pickup truck and full-size SUV plants are back at three shifts.
Nearly all of its other plants are now working at pre-pandemic shift levels.
GM reported a net loss for the quarter of US$806-million, or 56 US cents per share, versus a profit of US$2.4-billion or $1.66 US per share a year earlier.
EBay Inc. (EBAY-Q) declined 3.2 per cent in the wake of beating Wall Street estimates for quarterly profit on Tuesday and raising its full-year outlook, as the e-commerce company benefited from a surge in online shopping by people staying indoors due to coronavirus-driven lockdowns.
Business has been booming for e-commerce firms and companies with strong online presence as the COVID-19 pandemic has led more people to use their mobile phones and computers to shop.
Ebay now expects full-year adjusted profit between US$3.47 and US$3.59 per share. Analysts were expecting US$3.51 per share, according to IBES data from Refinitiv.
Canaccord Genuity analyst Michael Graham said: “eBay reported strong Q2 results as shelter-in-place restrictions and store closures drove millions of new active buyers to its marketplace, helping to return GMV growth to positive territory for the first time since 4Q18 despite continued headwinds from the implementation of online sales tax. The company also announced last week that it has agreed to sell its Classifieds business to Adevinta for $9.2-billion in cash and stock, whichin conjunction with the prior divestiture of Stubhub creates a pure-play eCommerce marketplace business. These moves will also allow management to focus on a ‘technology-led re-imagination’ of the buyer and seller experiences along with other strategic initiatives, such as the global expansion of managed payments now that the operating agreement with PayPalis expiring.With shares up 115 per cent from the March 23rd low, the stock appears to be pricing in a lot of this positive momentum, and management expects decelerating volume growth in Q3 as the economic reopening continues, leaving us HOLD rated for now.”
With files from staff and wires