A roundup of some of the North American equities making moves in both directions today
On the rise
Magna International Inc. (MG-T) rose 3.8 per cent in mid-afternoon trading on Friday after beating analysts’ estimates for quarterly profit on Friday, benefiting from its complete vehicles segment and power and vision unit. Excluding one-time items, Magna earned $1.63 per share in the fourth quarter, ahead of consensus analyst expectation of $1.59 per share. Net income attributable to Magna fell to $456-million, or $1.37 per share, in the quarter from $559-million, or $1.54 per share, a year earlier.
On a conference call following the release, Magna said tariffs continue to weigh on results, emphasizing the impact of steel and aluminium tariffs on plants south of the border. It expects volumes in China to be flat year-over-year in 2019.
Shares of Alimentation Couche-Tard Inc. (ATD-B-T) rose 0.7 per cent and Canopy Growth Corp. (WEED-T) fell 2 per cent after a Globe and Mail report that they are planning to sell recreational cannabis in Ontario together. Laval, Que.-based Couche-Tard, the largest convenience store operator in the country, is set to announce Friday a “trademark licence agreement” with one of last month’s 25 Ontario retail cannabis lottery winners. The winner in turn is applying for one of the province’s first legal cannabis store permits to open a location with Canopy’s “Tweed” branding in London’s White Oaks neighbourhood on April 1.
Keyera Corp. (KEY-T) jumped 8.7 per cent in response to Thursday’s release of its fourth-quarter results. The Calgary-based midstream oil and gas operator reported adjusted earnings before interest, taxes, depreciation and amortization of $250-million, a jump of 26 per cent year-over-year and well above the consensus projection on the Street of $186-million.
In a research note released Friday, Industrial Alliance Securities analyst Elias Foscolos said: “[Thursday], Keyera reported positive Q4/18 results. Higher-than-anticipated results largely attributed to a beat on estimates in the Marketing segment. A realized gain in the fourth quarter due to strong margins positively impacted the Marketing segment. In addition, lower cash taxes and the expectation of an FID in H1/19 on KAPS [Key Access Pipeline System] and an internally funded $2.1-billion 2019 capital program all read positive for the Company. We anticipate the market will have a positive reaction to the results today.”
Hudson’s Bay Co. (HBC-T) was up 8.5 per cent after announcing Thursday after market close a plan to close all 37 of its Home Outfitters stores in Canada as well as up to 20 of its Saks Off 5th outlets in the United States.
“Further streamlining our retail portfolio enables even greater focus on our businesses with the strongest growth opportunities. The divestiture of Gilt, rightsizing of Lord & Taylor, the recent merger of our European retail operations in Germany, and today’s announcement exemplify the bold strategic actions we are taking to set HBC up for long-term success,” said chief executive officer Helena Foulkes in a statement.
Saputo Inc. (SAP-T) was up 2.6 per cent after announcing its intentions to acquire Britain’s largest dairy food company Dairy Crest Group Plc for about 975 million pounds ($1.27-billion).
“The Transaction would enable Saputo to expand its international presence and enter the UK market by acquiring and investing in a well-established and successful industry player with a solid asset base and an experienced management team. Dairy Crest is an attractive platform which fits with Saputo’s growth strategy,” said the company in a statement.
Enerplus Corp. (ERF-T) rose 5.2 per cent following the release of its fourth-quarter results on Friday morning. The Calgary-based company saw a rise of 22 per cent in liquid production growth year-over-year and a 44-per-cent increase in adjusted funds flow.
On the decline
After kicking off earnings season for Canadian banks before market open on Friday, shares of Royal Bank of Canada (RY-T) fell 1 per cent in mid-afternoon trading. Canada’s biggest lender reported earnings per share, excluding one-time items, of $2.19, matching the expectation on the Street. The bank also hiked its quarterly dividend by 4 cents to $1.02.
“We don’t believe that these result will drive any catch-up versus peers in the near term,” said Eight Capital analyst Steve Theriault.
Shares of Barrick Gold Corp. (ABX-T) were down 1 per cent after the Globe and Mail reported it is considering a takeover bid for Newmont Mining Corp. (NEM-N), a transaction that would represent one of the largest mining deals ever and solidify the Toronto-based company’s position as the world’s largest gold producer.
According to the report, Barrick working on a two-step deal that would see it take over Newmont for about US$19-billion in stock, then flip some of its assets to Australia’s Newcrest Mining.
Shares of Colorado-based Newmont rose 2.5 per cent.
Loblaw Companies Ltd. (L-T) fell 0.6 per cent after an equity analyst at Desjardins Securities downgraded its stock.
On Thursday, the retailer’s stock fell 1.6 per cent following the release of its quarterly results, which featured limited sales gains due, in part, to its pricing strategy.
Home Capital Group Inc. (HCG-T) lost earning gains and sat 1.5 per cent lower after logging a year-over-year increase in fourth-quarter profit, driven by an 85-per-cent rise in mortgage originations. The alternative mortgage lender reported it earned $35.8-million or 46 cents per share for the quarter, versus a profit of $30.6-million or 38 cents per share during the same period in 2017. Analysts were projecting a profit of 43 cents per share for the quarter.
Canfor Corp. (CFP-T) dipped 0.9 per cent in the wake of reporting a quarterly adjusted net loss of 23 cents per share in the fourth quarter after market close on Thursday.
Raymond James analyst Daryl Swetlishoff said: “Since the company made the transformative Sweden acquisition of VIDA Group in mid-November, Canfor has under performed relative to peers (down 19 per cent for CFP vs. large cap lumber producers up 1 per cent and the TSX index up 6 per cent). While the miss should not be completely unexpected following well below consensus results from competitors, weakness in the stock could prevail and represents a buying opportunity for investors.”
Shares of Kraft Heinz Co. (KHC-Q) dropped 27 per cent a day after the U.S. food giant posted a quarterly loss and disclosed it had been subpoenaed by the U.S. Securities and Exchange Commission in October, related to an investigation into its accounting policies, procedures and internal controls related to procurement. The company also wrote down the value of its Kraft and Oscar Mayer brands as it highlighted the tough environment for the packaged food industry.
For the quarter ended Dec. 29, Kraft had a net loss of US$12.6-billion. It earned 84 US cents per share on an adjusted basis, missing Wall Street's estimate of 94 US cents.
"Investors for years have asked if 3G's extreme belt-tightening model ultimately would result in brand equity erosion," said JPMorgan analyst Ken Goldman, who cut his rating for its stock to "neutral" from "overweight".
"We think the answer arguably came [Thursday] n the form of a $15 billion intangible asset write-down for the Kraft and Oscar Mayer brands.”
Finning International Inc. (FTT-T) dropped 2.2 per cent after a pair of equity analysts downgraded its stock a day after the release of its quarterly results.
“Against the backdrop of elevated macro concerns, heavy equipment demand growth in Finning’s territories appears to be moderating,” said BMO’s Devin Dodge.
SNC Lavalin Group Inc. (SNC-T) fell 1.7 per cent after it reported a $1.6-billion quarterly loss, stemming from a writedown of $1.2-billion in oil and gas assets, and cut its dividend before market open, as its oil and gas business faces intensifying trade challenges in Saudi Arabia. The company lowered its quarterly dividend by 18.7 cents per share to 10 cents, as it seeks to save $131-million in cash annually.
“The year 2018 was a disappointing year, as our Mining & Metallurgy and Oil & Gas segments underperformed," said president and chief executive officer Neil Bruce in a statement. "Due to a deterioration of the Oil & Gas segment's near term prospects caused by various factors, including difficult inter-governmental relations between Canada and Saudi Arabia, unpredictable commodity prices and uncertain client investment plans, we were required to record a goodwill impairment in the quarter.
Freshii Inc. (FRII-T) was down 15.4 per cent after reporting its system-wide sales grew to $40.6-million in the fourth quarter, an increase of 9 per cent over the same period last year. Same-store sales fell 6.1 per cent, compared to same-store sales growth of 6.4 per cent for the same period a year earlier.
“We have a lot of important work to do in 2019 to get our business results where we want them to be. Specifically, we will concentrate on simplifying our in-store operations, improving our menu innovation, and investing more significantly in marketing and technology. We will also remain focused on addressing our underperforming stores, and the fourth quarter of 2018 reflects progress on this front,” said chairman and chief executive officer Matthew Corrin.
Shares of Stamps.com Inc. (STMP-Q), a California-based online postage service provider, plummeted 57 per cent after revealed it plans to end its partnership with the U.S. Postal Service, a key source of revenue for the company. The company said it expects 2019 adjusted earnings per share to fall between 48 per cent and 56 per cent.
“We’ve decided to discontinue our shipping partnership with the USPS so that we can fully embrace partnerships with other carriers,” Chief Executive Officer Kenneth McBride said on a conference call with analysts after the bell on Thursday.
With files from Staff and Wires
David Leeder