A roundup of some of the North American equities making moves in both directions today
On the rise
Telus Corp. (T-T) rose 1.4 per cent after it announced late Wednesday it is buying control of a German business-services company in a $1.3-billion deal to bulk up its international unit, which the Canadian telecom company says it plans to take public.
The acquisition of Berlin’s Competence Call Center will add 8,500 employees and expand Telus’s presence in the content-moderation business, which involves monitoring websites, forums and social-media platforms on behalf of corporate clients and removing hateful messages or other unseemly content.
- Alexandra Posadzki
Slack Technologies Inc. (WORK-N) increased 4.6 per cent after it beat Wall Street estimates for quarterly revenue and profit as it signed on larger companies to its workplace communication platform.
The company competes directly with Microsoft Corp’s workplace messaging platform, Teams, which grew more than 50 per cent to roughly 20 million daily active users in the September quarter.
In the latest quarter ended Oct. 31, Slack grew by about 20 per cent to more than 12 million daily active users.
Kinross Gold Corp. (K-T) increased 1.2 per cent with the premarket announcement that it has agreed to sell its remaining 20,656,250 shares in Lundin Gold Inc. (LUG-T) to a syndicate of buyers for expected gross proceeds of approximately $150-million.
The syndicate of buyers includes a wholly-owned subsidiary of Newcrest Mining Limited and the Lundin Family Trust.
The shares for sale represent approximately 9.2 per cent of the issued and outstanding shares of Lundin Gold.
Lundin shares rose 1.7 per cent.
Paramount Resources Ltd. (POU-T) jumped 3.8 per cent after it announced that it has closed the sale of certain natural gas weighted properties in West Central Alberta for about $55-million. Paramount said it will retain all of its Duvernay assets in both Willesden Green and the East Shale Basin, as well as its fee title and royalty lands.
"The transaction significantly reduces the complexity of Paramount's operations, as the company has disposed of [about] 320,000 net acres and associated wells and facilities south of township 53 in Alberta (excluding the Retained Lands)," it stated, adding that it has "minimal capital spending planned for the assets in the near term.
In a research note, Laurentian Bank Securities analyst Jonathan Tempro said: “This asset sale is consistent with POU’s strategy of high-grading its asset base, as it continues to focus on liquids-rich Montney development at Karr and Wapiti. The Company is expected to release its 2020 guidance in the New Year, and has been communicating that it plans to outspend cash flow as it expands its Montney program to fill new processing capacity, therefore the latest asset sale helps to meet that objective without over-levering its balance sheet.”
Major Drilling Group International Inc. (MDI-T) jumped 3.3 per cent after it announced better-than-anticpated quarterly results.
The Moncton-based company said revenue for its second quarter ended Oct. 31 came in at $121.2-million, up 15 per cent from the same quarter last year and ahead of expectations of $119.1-million.
Net earnings were $7.3-million or 9 cents per share for the quarter, compared to $3.3-million or 4 cents per share for the prior-year quarter. Analysts were expecting earnings of 8 cents per share.
Kinder Morgan Inc. (KMI-N) was up 2 per cent after saying it expects core earnings to decline next year but signaled it would move to cut its debt load and increase its dividend.
Investors this year have pushed U.S. oil and gas pipeline companies to improve their financial health and deliver positive free cash flow. Low energy prices have pressured pipeline earnings and some projects have stalled as U.S. shale drillers idled rigs.
Kinder Morgan said it expected adjusted pre-tax earnings of US$7.6-billion next year, in line with Wall Street estimates but down from a forecast of US$7.8-billion in 2019.
The company plans to spend US$2.4-billion on expansion projects and joint ventures next year, down from US$3.1-billion last year but still above estimates.
U.S. drug maker Eli Lilly and Co. (LLY-N) rose 0.9 per cent after it said on Thursday it will create a new cancer research division that will be run by top executives from Loxo Oncology, a cancer-focused biotech company it acquired earlier this year.
The move highlights Lilly’s efforts to double down on its cancer business following the $8 billion acquisition of Loxo in February.
The company has been focused on increasing sales in core franchises, including diabetes and oncology, as sales of older blockbuster medicines such as diabetes treatment Humalog and erectile dysfunction drug Cialis face pressure from generic competition.
Dollar General Corp. (DG-N) rose 1 per cent on the heels of raising its full-year profit forecast on Thursday after reporting a better-than-expected quarterly same-store sales as it attracted more shoppers to its stores.
Same-store sales rose 4.6 per cent in the third quarter ended Nov. 1, above the average analyst estimate of 3.34-per-cent increase, according to IBES data from Refinitiv. The company raised its full-year adjusted profit to the range of $6.55 to $6.65 per share from $6.45 to $6.60 per share.
On the decline
Toronto-Dominion Bank (TD-T) shares lost 3.5 per cent after it reported a 3.5-per-cent fall in fourth-quarter profit on Thursday, as Canada’s second-biggest lender by market value was hurt by higher provisions for loan losses and a restructuring charge.
Provisions for credit losses also rose at other major Canadian banks, including bigger rival Royal Bank of Canada , Bank of Montreal, Canadian Imperial Bank of Commerce and Bank of Nova Scotia.
TD Bank’s provisions for loan losses, or the amount a bank sets aside to cover bad loans, rose 33 per cent.
Net income fell to $2.86 billion, or $1.54 per share, in the quarter ended Oct. 31, from $2.96 billion, or $1.58 per share, a year earlier.
Excluding items, the lender earned $1.59 per share.
Shares of Canadian Imperial Bank of Commerce (CM-T) dropped 5.2 per cent after it reported quarterly profit that fell short of analysts’ estimates on Thursday, hurt by higher provision for bad loans and slower growth at its domestic banking business.
Net income at CIBC’s Canadian retail banking business, which provides loans and other financial products to small businesses and individual consumers across Canada, fell 10 per cent to $601-million from a year earlier.
The bank’s capital markets unit reported net income of $226-million, down 3 per cent from a year ago.
Canadian Western Bank (CWB-T) plummeted 6.9 per cent after its fourth-quarter results fell short of expectations on the Street.
Before the bell, the bank reported earnings per share of 77 cents, missing the consensus expectation by a penny. Revenue of $221-million also narrowly fell short of the analysts’ projection ($222.6-million).
Canadian Tire Corp. (CTC.A-T) fell 2.8 per cent after shortseller Spruce Point Capital Management LLC released a research report expressing “significant concerns” about the retailer, estimating 35 to 50 per cent downside risk.
The New York-based firm called it a “terrible risk” and sees it trading at a “significant premium to our downside case.”
“Canadian Tire is a challenged brick-and-mortar retailer perceived as a dependable mid-single-digit grower on an increasingly precarious foundation of unsustainable debt,” the New York-based firm said. “CTC is facing a credit downgrade due to its misunderstood and over-levered balance sheet, which has forced it to sell profitable assets in order to continue its capital return plan. Current leverage of ~3.5x is significantly above rating agency guidance of 2x needed to prevent a downgrade and requires debt reduction of ~C$1,600m, but has no free cash flow after promised dividends and buybacks. CTC’s stale brand and dated model, together with broader retail headwinds, have made its financial results dependent on aggressive accounting practices, which are potentially misleading investors by covering up poor organic growth. The market is blissfully ignorant to the Amazon displacement effect that our data shows is accelerating. Recent cost reduction measures and return of capital policies to investors are ill-fated, too little and too late. Outside of retail, CT Financial Services’ is a fast growing, risky business with a deteriorating credit card portfolio. We believe CTC will begin to under-perform optimistic expectations and the combination of these factors should result in a valuation at a significant discount to the market and its peers.”
See also: U.S. short seller targets Canadian Tire, says retailer’s shares have 50 per cent downside
Tiffany & Co. (TIF-N), which is being bought by Louis Vuitton owner LVMH, dipped 0.1 per cent after it fell short of Wall Street estimates for quarterly sales on Thursday as the luxury jeweler was hurt by weak demand from foreign tourists and business disruptions in Hong Kong.
Tiffany’s same-store sales, excluding the effects of currency exchange rates, were up 1 per cent in the third quarter, missing analysts’ average estimate of a 1.44 per cent increase, according to IBES data from Refinitiv. The company’s net earnings fell to US$78.4 million, or 65 US cents per share, in the quarter ended Oct. 31, from US$94.9-million, or 77 US cents per share, a year earlier.
With files from Terry Weber, Brenda Bouw, staff and wires
David Leeder