A roundup of some of the North American equities making moves in both directions today
On the rise
Cogeco Communications Inc. (CCA-T) rose 8.9 per cent after announcing Wednesday it is selling its cloud services unit, Cogeco Peer 1, to investment firm Digital Colony in a deal valued at $720-million.
“Since Cogeco Communications acquired Peer 1 Hosting in 2013, the data centre and connectivity markets have evolved and consolidated significantly,” said company president and CEO Philippe Jette. “In this context, we made the decision to focus Cogeco Communications’ resources on our Canadian and American broadband services businesses. This transaction will provide greater flexibility to pursue organic investment and acquisition opportunities.”
It also announced its intention to establish a normal course issuer bid. It’s seeking approval to repurchase for cancellation up to 10 per cent of the “public float” of issued and outstanding subordinate shares, which would represent approximately 1.86 million shares.
It plans to use a “significant” portion of net proceeds to repay amounts outstanding under its term revolving facility.
Best Buy Co Inc. (BBY-N) rose 14.2 per cent after reporting better-than-expected holiday quarter profit and sales on Wednesday before market open. Its U.S. domestic comparable sales rose 3 per cent in the three months ended Feb. 2, topping the 2.03-per-cent expectation on the Street.
Excluding one-time items, the company earned US$2.72 per share, exceeding the US$2.57 expectation.
With the results, the retailer released guidance that included revenue of US$42.9-billion to US$43.9-billion and comparable sales growth of 0.5 to 2.5 per cent. It’s also forecasting 2020 adjusted profit of US$5.45 to US$5.65 per share, versus analysts’ expectations of US$5.49.
"Best Buy continues to generate increasing traction in its multi-channel quest, with both brick-and-mortar and online posting impressive performance for both Q4 and FYE 2018,” Moody’s analyst Charlie O’Shea told Reuters.
Imax Corp. (IMAX-N) shares rose as much as 13.96 per cent after releasing better-than-anticipated fourth-quarter results on Tuesday after market close. The company reported revenue of US$109-million and adjusted earnings per share of 26 cents, exceeding the Street’s expectations of $102.5-million and 24 cents.
“We believe our achievements last year set the stage for IMAX to have a blockbuster year in 2019. We further differentiated The IMAX Experience, increased awareness of the IMAX brand and tackled key challenges in China, where we delivered our strongest box office year ever and doubled the industry growth rate,” said IMAX chief executive officer Richard L. Gelfond.
Lowe’s Companies Inc. (LOW-N) jumped 2.5 per cent after beating Wall Street’s expectations with its fourth-quarter results, despite reporting disappointing sales growth due largely to the closure of 27 Canadian stores and four support centres.
The home improvement retailer reported a net loss of US$824-million and diluted loss per share of US$1.03 for the quarter ended Feb. 1, which included pre-tax charges of US$1.6-billion. That included US$952-million related to a non-cash goodwill impairment charge associated with the company’s Canadian operations.
Excluding one-time items, the home improvement retailer earned 80 US cents per share, 1 US cent above analysts’ estimates.
“U.S. macroeconomic fundamentals remain sound for 2019, and we will continue to implement process and technology improvements to capitalize on the immediate opportunity to improve results,” said president and CEO Marvin Ellison in a statement. “We anticipate continued weakness in the Canadian housing market in the near-term, but remain confident in our market position in Canada and the long-term potential of that business.”
The results came a day after rival Home Depot (HD-N) disappointed with its results.
High Liner Foods Inc. (HLF-T) erased early losses and sat up 4.6 per cent after announced before market open that fourth-quarter sales decreased by US$20.1-million to US$242.9-million compared to US$263-million a year earlier. Analysts were expecting revenue of US$246.9-million.
“Our fourth quarter and year-end financial performance is aligned with our expectations for this stage of our turnaround plan,” said president and CEO Rod Hepponstall in a release. “With our successful organizational realignment behind us, our team is now positioned to unlock High Liner’s potential and deliver on our remaining critical initiatives. While there is still work to do and headwinds to contend with, we are seeing progress related to our ability to operate more efficiently and maximize opportunities on both sides of the border as one integrated North American organization.”
Royal Bank of Canada (RY-T) was up 0.6 per cent after announcing plans to repurchase 20 million common shares, which represents approximately 1.4 per cent of the 1,435,590,130 common shares issued and outstanding as of Feb. 15.
“The normal course issuer bid will give us the flexibility to manage the Bank’s capital position while generating shareholder value,” the company said in a release.
On the decline
Shares of Laurentian Bank of Canada (LB-T) plummeted 9.8 per cent after it revealed plans to cut its workforce by 10 per cent, or 350 employees, over the next 12 months.
The pre-market announcement came with the release of its quarterly results, which saw net income drop 32 per cent year-over-year to $40.3-million. For the first quarter, the Montreal-based bank reported earnings per share of 88 cents, dropping from $1.41 during the same period a year ago.
“This quarter’s performance was impacted by lower capital market revenue, nonetheless Management remains committed to achieve mid-term targets and ultimately, create long-term value for its shareholders,” said president and chief executive officer Francois Desjardins in a release.
“Laurentian Bank Financial Group has never been in a better financial position, in terms of its solid capital and liquidity levels; it continues to have an industry low loan loss provision - a testament to the quality of our underwriting and credit risk management; and even if there is more work to do, it has never been stronger in terms of its processes and technology.”
National Bank of Canada (NA-T) dipped 0.6 per cent after reporting mixed quarterly results. For the quarter that ended Jan. 31, National Bank reported profit of $552-million, or $1.50 per share, compared with $550-million, or $1.46 a share, a year ago. The Street was expecting earnings per share of $1.54.
“National Bank delivered good performance despite challenging markets,” said president and chief executive officer Louis Vachon.
“We continue to benefit from the diversification of our business, a strong Quebec economy and our prudent approach to risk. Credit quality remains excellent, and the Bank posted solid capital ratios.”
Sleep Country Canada Holdings Inc. (ZZZ-T) was down 6.7 per cent after its fourth-quarter financial results fell short of expectations. Adjusted net income was $14.8-million or 40 cents per share, which was below expectations of 43 cents and compared to adjusted income of $15.9-million or 42 cents a year ago.
Same-store sales growth fell by 2.7 per cent, versus the same period a year ago.
“While the comparable in Q4/17 was a strong 9.3 per cent, this is nonetheless a poor result,” said Laurentian Bank Securities analyst Elizabeth Johnston in a research note.
Bank of Nova Scotia (BNS-T) was down 0.6 per cent after an equity analyst at CIBC World Markets downgraded its stock a day after the release of weaker-than-anticipated quarterly results.
“We are also not in a position to recommend adding to positions at this time,” said Robert Sedran.
Turquoise Hill Resources Ltd. (TRQ-T) fell 13.7 per cent after its 2019 financial guidance disappointed the Street.
Operating cash costs for 2019 are expected to be $800 million to $850 million.
U.S. pharmaceutical company Mylan NV (MYL-Q) dropped 15.1 per cent after it missed expectations with both its quarterly results and forecast for 2019, due in part to costs related to issues with its Morgantown, WV., plant. due in part to costs related to issues and restructuring at its Morgantown, West Virginia, plant. The company’s net earnings fell to US$51.2-million, or 10 US cents per share, in the quarter, from US$244.3-million, or 46 US cents per share, a year earlier.
“Even with the approvals and launches of Copaxone, Neulasta and Advair these approvals are only providing some relief, but are not altering the systemic problems inherent with the generic model,” Cowen & Co analyst Ken Cacciatore said in a report.
With files from wires and staff
Editor’s note: An earlier version of this article incorrectly stated Lowe's closed 31 Canadian stores. In fact, the company shut 27 underperforming stores as well as four support centres.
David Leeder