A roundup of some of the North American equities making moves in both directions today
On the rise
Royal Bank of Canada (RY-T) rose 0.02 per cent in the wake of issuing uncing a deal to sell its banking operations in the Eastern Caribbean to a consortium of indigenous banks in the region.
Financial terms of the deal were not disclosed.
The agreement includes branches in Antigua, Dominica, Montserrat, St. Lucia, and St. Kitts and Nevis.
Shares of TORC Oil and Gas Ltd. (TOG-T) rose 4.7 per cent following the release of its 2020 capital budget and production guidance after the bell on Wednesday.
The Calgary-based company set a capex budget of $190-million, narrowly higher than the $180-budget guidance set for 2019. It maintained its 2019 exit production levels resulting in 2020 average and exit production of 28,300 barrels of oil equivalent per day.
Raymond James analyst Jeremy McCrea said: “One of the strongest attributes TORC has going for it is its top-tier corporate rates of return. With its conventional Mississippian play (payouts less-than 6 months), other remaining locations in the Cardium/Torquay (payout less-than 12 months), and modest infrastructure capital, in our view there are few other businesses that can compete as economically. How that is returned to investors can bein different ways, but with the increase in the dividend this year (now 7.5-per-cent yield), debt adjusted production per share growth at 3 per cent at US$52/bbl, the business model of TORC remains rather strong. We’ll note at current strip prices, TOG would pay down nearly 22 per cent of its debt for 2020. Overall,combined with a valuation that has almost never been as attractive, investors should be rather encouraged at this entry point. We believe TORC remains a stable and predictable business withone of the better balance sheets that should help confidence with investors.”
MedMen Enterprises Inc. (MM) rose 26.3 per cent after announcing it sees another annual rise in profit and revenue in 2020 driven by what Chief Executive Ed Bastian called a growing interest in air travel by consumers across the generational spectrum.
Some of the updates include financial agreements including US$37-million in financing, an amendment to certain of the company’s outstanding debt and cost reductions.
Delta Air Lines Inc. (DAL-N) rose 3 per cent after announcing it sees another annual rise in profit and revenue in 2020 driven by what Chief Executive Ed Bastian called a growing interest in air travel by consumers across the generational spectrum.
“People are more inspired to travel,” Mr. Bastian told Reuters ahead of the carrier’s investor day, citing the increased affordability of flying and advances in social media and technology, even as environmental and “flight-shaming” activists threaten air travel growth in Europe.
Atlanta-based Delta is forecasting 2020 profit of US$6.75 to US$7.75 per share, versus analysts’ mean estimate of US$7.06 according to IBES data from Refinitiv, on revenue growth of 4 per cent to 6 per cent and US$4-billion of free cash flow.
Still, Mr. Bastian said Delta’s investors and customers are also increasingly concerned about the environmental impact of air travel and cited airlines’ ability to protect the environment as an existential threat to their growth.
Southwest Airlines Co. (LUV-N) was up 0.9 per cent after it said on Thursday it had reached a confidential compensation agreement with Boeing Co for a portion of the projected financial damages related to its 737 MAX aircraft grounding.
The U.S. airline also said it would share the proceeds from Boeing with its employees. The world’s largest 737 MAX operator expects the profit sharing accrual to be about $125 million.
Southwest said it continues to engage in talks with Boeing for further compensation related to the MAX grounding, adding that the details of the talks and the settlement were confidential.
With the MAX parked since mid-March following crashes on Lion Air and Ethiopian Airlines that together killed 346 people, Southwest has had to scale back its growth plans and cancel north of 100 daily flights, wiping $435 million from its earnings between January and September.
Encana Corp. (ECA-T) was higher by 3.8 per cent in the wake of filing paperwork on Wednesday with the U.S. Securities and Exchange Commission and Canadian securities regulatory authorities as part of a plan to shift its base to the United States.
The Calgary-based company in October became the latest to decide to move away from Canada as the nation battles with pipeline capacity shortages.
Encana, once among Canada’s largest oil companies, has been shifting its focus to the United States and earlier this year bought Texas-based Newfield Exploration Co for US$5.5-billion.
Encana will change its name to Ovintiv Inc and continue to be traded both on the Toronto and New York stock exchanges under the ticker symbol ‘OVV’.
See also: Major Encana shareholder Letko, Brosseau & Associates vows to vote against U.S. move
Apple Inc. (AAPL-Q) rose 0.5 per cent despite an analyst at Credit Suisse saying China iPhone shipments dropped in November.
In a research note released before the bell, analyst Matthew Cabral said shipments dropped 35.4 per cent year-over-year in November and “significantly” lagged a 0.2-per-cent rise in the broader smartphone market in the country.
“We recognize monthly data can be volatile and the shift in launch timing vs. last year is likely skewing y/y compares; however, the drop in November marks the second straight double digit decline (down 10.3 per cent y/y in Oct) and total shipments in China since the launch of the iPhone 11 family are now down 7.4 per cent y/y (Sept-Nov),” he said.
“A sustained softness in China (approximately 20 per cent of Apple’s revenue and op. profit) is an incremental concern, particularly given the increasingly easy y/y compares. At this stage, we’re hesitant to extrapolate weak Chinese data points broadly across Apple’s global footprint given our view that structural factors are at play (we see aggressive local competition and a narrower ecosystem advantage in China) and build plans remain largely unchanged, per our Asia team; however, we’ll be watching closely as the Nov data presents downside risk to our near-term iPhone estimates.”
On the decline
Montreal-based airline and tour operator Transat AT Inc. (TRZ-T) slipped 0.4 per cent after it posted a bigger profit in the fourth quarter as higher ticket prices offset rising costs.
Transat’s revenue rose by almost 4 per cent to $690-million in the three months ending Oct. 31, compared with a year ago. Profit rose to $20-million, or 54 cents a share, from $6.8-million (18 cents), Transat said on Thursday morning.
For the full year, rising fuel prices and a weaker dollar helped send Transat to a loss of $33-million (88 cents), compared with a profit of $6.5-million (17 cents) in the previous year.
Transat said on Thursday it expects the Air Canada takeover to be final in the second quarter of 2020 when regulatory approvals in Canada and Europe are complete.
Desjardins Securities analyst Benoit Poirier said: “Overall, while we believe investors will focus on the takeover transaction, we note that 4Q results are encouraging as TRZ starts to benefit from its fleet-optimization initiative. At this point, we remain confident that the proposed transaction will close and see value at the current share price (potential return of 13 per cent).”
Sobeys parent Empire Co. Ltd. (EMP-A-T) dropped 9.3 per cent after it reported earnings per share in the latest quarter that fell short of expectations on the Street.
The company reported normalized earnings per share of 49 cents, missing the consensus projection by 8 cents.
Same-store sales growth of 2 per cent was also lower than anticipated.
Canfor Corp. (CFP-T) slipped 0.3 per cent in the wake of issuing a statement Thursday morning saying independent proxy advisory firms Institutional Shareholder Services Inc. and Egan-Jones Proxy Services have both recommended its shareholders vote for a proposal B.C. billionaire Jim Pattison’s Great Pacific Capital Corp. to acquire the rest of Canfor’s stock and take the company private. The shareholder vote is on Dec. 18.
Canfor said it felt compelled to release the recommendations after the recommendation of Glass, Lewis & Co. was publicized by a shareholder in what the company called "a misleading and selective manner by press release without noting that both ISS and Egan-Jones had recommended that shareholders vote for the arrangement."
Canfor said it believes the Glass Lewis report, “which recommended that shareholders not vote in favour of the arrangement, contains material errors and omissions regarding the facts of the matter on which the opinion is based.”
See also: Billionaire Jim Pattison says he isn’t budging from $16-a-share offer for Canfor
Cott Corp. (BCB-T) slid 0.5 per cent after announcing approval of a new 12-month share repurchase program of up to $50-million
“Cott’s board of directors has determined that the repurchase of a portion of Cott’s outstanding common shares is an appropriate use of available cash and is in the best interests of Cott and its shareowners,” the company said in a release.
Lululemon Athletica Inc. (LULU-Q) was down after it forecast holiday quarter profit largely below analysts’ expectations on Wednesday, as the athleisure pioneer invests heavily to launch new products to fend off intensifying competition.
The company’s shares fell 3.8 per cent. They have nearly doubled in value this year as a big push into menswear and online helped the company beat revenue estimates for the first three quarters of the year.
Chief Financial Officer Patrick Guido said on a post-earnings conference call the company would have to invest in developing new sports bras and accessories to keep up with investors’ growth expectations.
Known for its $100 yoga pants, Lululemon has dominated the market for pricey, fashion forward athleisure, but this year has faced competition from cheaper yet similar products from companies such Sweden’s H&M.
With files from Eric Atkins, Terry Weber, staff and wires
David Leeder