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A roundup of some of the North American equities making moves in both directions today

On the rise

Shares of Canadian Natural Resources Ltd. (CNQ-T) sat 2.3 per cent higher in early afternoon trading on Wednesday following the premarket announcement it has acquired Devon Energy Corp.’s (DVN-N) Canadian assets for $3.8-billion.

The Oklahoma City-based company’s asset base consists of 100-per-cent operated long life low decline thermal in situ production as well as 95-per-cent operated conventional primary heavy crude oil production, both adjacent to existing Canadian Natural assets.

In New York, Devon shares were down 0.2 per cent.

In a research note, Raymond James analyst Chris Cox said: “While the acquisition price looks attractive, the modest accretion as a result of this transaction is partially offset by an increase in leverage and increased heavy oil price exposure just as we expect heavy differentials to widen out again. On balance, the transaction is consistent with the company's strategy and represents good value, but we suspect the Street will be tempered in the enthusiasm around the acquisition price, given the additional leverage and heavy oil exposure realized through this transaction”

AltaCorp’s Nick Lupick said: “Overall we view the release as being mixed as the assets fit well in CNQ’s portfolio, however, we are cognizant that the price paid is likely higher than most investors were expecting.”

Air Canada (AC-T) shares rose 0.5 per cent on Wednesday after it announced it has renewed its normal course issuer bid and plans to buy back 24.13 million shares, or 10 per cent of the public float as of May 17.

“Air Canada believes that, from time to time, the market price of its Shares may not fully reflect the underlying value of its business and future prospects,” said the company in a release. “In such circumstances, Air Canada may purchase for cancellation outstanding Shares, thereby benefitting all shareholders by increasing the underlying value of the remaining Shares.”

Canadian Western Bank (CWB-T) rose on the premarket release of its quarterly results, sitting down 0.8 per cent.

The bank reported revenue of $210-million in the second quarter ended April 30, up from $196.6-million a year earlier and in line with expectations. Net income was $62-million or 71 cents per share versus $60.5-million or 68 cents a year ago. Analysts were expecting EPS to come in at 73 cents.

“CWB closed the first half of the year with a solid second quarter as we continue to execute against our Balanced Growth strategy,” said president and chief executive officer Chris Fowler. “Double-digit year-over-year loan growth delivered continued geographic and industry diversification, with 14% growth in Central and Eastern Canada as well as within the strategically targeted general commercial lending category. We also continue to execute on key strategic objectives to diversify funding sources. Sequential growth of branch-raised deposits accelerated to 3%, and we delivered higher net interest margin compared to both last year and last quarter.”

On the decline

Bank of Montreal (BMO-T) slipped 2.7 per cent on the release of weaker-than-anticipated second-quarter financial results before market open.

For the quarter that ended Apr. 30, BMO reported profit of $1.5-billion, or $2.26 per share, up 20 per cent from $1.25-billion, or $1.86, a year ago. But last year’s second-quarter results were diminished by a $260-million restructuring charge, which cost the bank $192-million after tax.

Adjusting to exclude that charge as well as costs related to acquisitions, BMO earned $2.30 per share. Analysts had expected adjusted earnings per share of $2.33, according to data from Refinitiv.

BMO increased its quarterly dividend by 3 cents to $1.03 per share.

A day after it reported quarterly results that fell short of expectations on the Street, sending its stock down 0.6 per cent, shares of Bank of Nova Scotia (BNS-T) fell 0.6 per cent more.

CIBC World Markets analyst Robert Sedran said: “After a while, even we can take a hint. This was the fourth consecutive quarter that saw results come in below our estimates, with loan losses in particular being higher than modeled. We see this performance as structural rather than cyclical … in other words, as loan and geographic mix evolves toward more international and less Canadian secured, the revenue outlook improves but our expectations on the loan loss line also need to evolve to capture the higher risk. Our estimates have come down to what we hope is a more realistic level. As for the outlook, management noted that F2018′s acquisition spree is performing well and ahead of expectations, which helps improve the growth rate next year. For this year, we assume the bank will land below its 7-per-cent-plus medium-term growth rate, which makes a valuation that is below historical averages less relevant for now. As of the close, the shares traded at 9.8 times our F2019 EPS estimate, compared with the peer average of 10.2 times.”

After posting the slowest revenue growth in eight quarters with a forecast for deteriorating conditions, shares of Canada Goose Holdings Inc. (GOOS-T) plummeted more than 28 per cent.

The high-end winter clothing maker’s revenue rose 25 per cent to US$156.2-million in the fourth quarter, falling just shy of below analysts’ estimates of US$156.8-million.

However, its forecast for 20-per-cent growth in 2020 will put into on a path to undershoot analysts’ average estimate of US$1.05-billion by more than US$50-million, according to Reuters.

Aimia Inc. (AIM-T) dipped 5.3 per cent after it announced a plan to file a management information circular for the upcoming annual general meeting of shareholders which includes a proposal to cut its board to six directors compared to nine directors a year ago and the 12 directors presented in its 2017 circular.

"Aimia will continue to evaluate the optimal skills mix and board size to ensure alignment with the company's strategy and leadership needs," the company stated.

Indigo Books & Music Inc. (IDG-T) dropped 22.5 per cent after announcing after the bell on Tuesday a $36.79-million net loss in fiscal 2019, which represents a 3-per-cent drop from the previous year.

“Revenues were challenged by the operating stresses stemming from major store renovations, relocations, store closures, and the prolonged Canada Post strike, which significantly impacted performance throughout the period with lagging effects into the fourth quarter,” the company said. “Results were then further impacted by a pull back in consumer spending on nonessentials in the fourth quarter.”

New Gold Inc. (NGD-T) dropped 5.3 per cent after providing an update on the 2019 delineation and exploration programs at its New Afton and Rainy River Mine.

“The Company had previously announced its intention to refocus the Company’s efforts on identifying organic growth opportunities by launching strategic exploration programs at both assets,” it said.

With files from Brenda Bouw, staff and wires

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:59pm EDT.

SymbolName% changeLast
GOOS-T
Canada Goose Holdings Inc
+3.09%16.33
CWB-T
CDN Western Bank
0%28.2
IDG-T
Indigo Books & Music Inc
+1.98%2.06
NGD-T
New Gold Inc
-0.44%2.28
BMO-T
Bank of Montreal
+1.13%132.25
AC-T
Air Canada
-0.15%19.61
CNQ-T
Canadian Natural Resources Ltd.
+0.87%103.33
AIM-T
Aimia Inc
-1.92%2.56
DVN-N
Devon Energy Corp
+1.46%50.18
BNS-T
Bank of Nova Scotia
+0.94%70.07

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