A roundup of some of the North American equities making moves in both directions today
On the rise
Canadian Pacific Railway Ltd. (CP-T) was up 2.7 per cent after reporting a 28-per-cent increase in quarterly profit on Tuesday after the bell, despite a dip in freight volumes in the first quarter.
For the three months ended March 31, CP posted earnings of $434-million or $3.09 a share, compared with $348-million or $2.41 in the same period a year earlier. Revenue was $1.77-billion, a 6-per-cent rise. Adjusted for foreign exchange on debt and lease liabilities, profit was $2.79 a share. Analysts expected adjusted per-share profit of $2.98 and revenue of $1.77-billion.
CIBC World Markets analyst Kevin Chiang said: “Despite CP reporting a Q1 miss, we maintain our positive thesis on the name with the company maintaining its 2019 outlook. We continue to see CP benefiting from a strong growth pipeline and the ability to absorb this volume with excess capacity on its network.”
Tfi International Inc. (TFII-T) rose 5 per cent in reaction to the release of better-than-anticipated first-quarter results on Tuesday after the bell.
The Montreal-based transport and logistics company reported adjusted earnings per share of 77 cents, exceeding the consensus estimate on the Street by 8 cents.
Industrial Alliance Securities analyst Nav Malik said: “TFII continues to execute on improving operational efficiency and maximizing profitability. In addition, the Company remains an active consolidator in the North American trucking industry, with acquisitions further adding to its growth profile.”
Cresco Labs Inc. (CL-C), a Chicago-based cannabis company, was up 8 per cent after it reported fourth-quarter revenue of US$17-million, up 411 per cent year-over-year and above expectations of $15.2-million.
Its net loss of US$2.6-million in the quarter ended Dec. 31, compared to a net loss of US$3-million in the prior-year period.
“We completed 2018 with another quarter of positive pre-tax income that reflected continued strong execution across all areas of our operations,” said co-founder and CEO Charles Bachtell in a statement. “We continue to successfully enter new markets with beneficial regulatory structures, increase our production and processing capacity, and expand the distribution for our unique and sophisticated ‘house of brands.’ Our ability to offer compelling products to all major segments of the cannabis market and achieve high levels of market penetration is generating strong growth in revenue and significant improvement in our gross margin.
Shares of Boeing Co. (BA-N) rose 0.3 per cent despite the company’s first-quarter revenue and cash flow results falling well short of expectations on the Street.
The company said it faced $1-billion in increased costs in the first-quarter ended March 31, related to the 737 aircraft as it halted deliveries of the grounded planes to customers around the globe.
The company also said it was halting share buybacks.
“Across the company, we are focused on safety, returning the 737 MAX to service, and earning and re-earning the trust and confidence of customers, regulators and the flying public,” said Boeing chairman, president and chief executive officer Dennis Muilenburg in a release. “As we work through this challenging time for our customers, stakeholders and the company, our attention remains on driving excellence in quality and performance and running a healthy sustained growth business built on strong, long-term fundamentals.”
EBay Inc. (EBAY-Q) shares jumped 5 per cent after the company raised its full-year sales and profit forecasts after the bell on Tuesday.
Excluding items, eBay earned 67 US cents per share in the first quarter, beating the Street’s expectation of 63 US cents per share.
In a research note, RBC Dominion Securities analyst Mark Mahaney said: “Q1 was a beat & modest raise on Revenue, Margins, and EPS for EBAY. That said, the company missed on GMV [gross merchandise volume] due to reduction in lower ROI marketing spend, specifically on higher-priced items, Internet sales tax and VAT, and some international macro headwinds. We continue to interpret FY19 guide to imply continued declines in its core U.S. GMV.”
After projecting annual revenue growth in the low teens for the next five years, Lululemon Athletica Inc. (LULU-Q) rose 0.8 per cent as it hosted its first analyst day in five years on Wednesday.
“The growth strategy includes a plan to double men’s and digital revenues, and to quadruple international revenues,” it said in a statement. “The Company’s core women’s business and its agile store formats in North America will also remain focus areas and are expected to generate revenue growth in the low double digits annually for the next five years.”
“The Power of Three strategic plan also includes contributions from new product categories and offerings, such as its membership program which is currently in pilot, as the Company further leverages its position as an experiential brand for guests across channels.”
On the decline
Benefiting from higher Canadian crude prices, Cenovus Energy Inc. (CVE-T) reported a first-quarter profit before the bell on Wednesday, however its share price dipped 1.9 per cent.
“In the fourth quarter, in some of the most difficult macro-economic conditions we’ve ever faced and while voluntarily managing our oil sands production lower, we remained relatively cash-flow neutral and continued to deleverage our balance sheet. I believe we are well positioned to make material progress on our business plan and further deleverage in 2019,” said Cenovus president and CEO Alex Pourbaix in a release. “Over the past year, Cenovus has become a stronger company through our focus on capital discipline and cost leadership while maintaining safe and reliable operations.”
The company’s net income rose to $110-million, or 9 cents per share, from a loss of $914-million, or 74 cents per share, a year earlier.
Total production fell to 447,270 barrels of oil equivalent per day from 487,464 boe/d in the quarter ended March 31.
In a research note, Raymond James analyst Chris Cox said: “ While the headline beat is sizable, a number of the factors driving the variance appear temporal, in our view. Cash taxes should become more significant on a go-forward basis, Foster Creek royalties should normalize following a quarter of deferred true-ups, stronger gas price realizations reflected anomalies in the spot market during some of the cold spells in Western Canada and roughly half of the margin generated in the Downstream consisted of FIFO-based gains (in fact, Cenovus’ own disclosure would suggest full-year operating margin from the Downstream should only be about $250-million, based on market pricing during 1Q19). This is all to say that, while the quarter was a large beat vs. our estimates and consensus, we see little in the release that suggests meaningful upside to go-forward forecasts. One-time or not, the good news is that these windfalls are allowing the company to more aggressively pay down debt, which remains a key catalyst driving sentiment in the name."
Houston-based Occidental Petroleum Corp. (OXY-N) slumped 0.6 per cent after making a US$57-billion bid for Anadarko Petroleum Corp. (APC-N), exceeding the US$50-billion offer from Chevron Corp. (CVX-N).
“Occidental believes its proposal is superior both financially and strategically for Anadarko’s shareholders, creating a global energy leader with the scale and geographic diversification to drive growth and deliver compelling value and returns to the shareholders of both companies,” the company said in a release. “The combined company will be uniquely positioned to leverage Occidental’s demonstrated operational and technical expertise, producing greater anticipated synergies than Anadarko’s pending transaction.”
Occidental’s US$76 per share offer is comprised of US$38 in cash and 0.6094 of its shares. It represents a premium of 19 per cent to Anadarko’s closing price on Tuesday and 62 per cent to the closing price on April 11, the day before Chevron made its bid.
Under Chevron’s bid, Anadarko shareholders are set to receive 0.3869 shares of Chevron and US$16.25 in cash for each Anadarko share.
Shares of Anadarko jumped 11.6 per cent, while Chevron lost 3.1 per cent.
Caterpillar Inc. (CAT-N) fell 3 per cent amid continued fears of weakness in China, a key growth market which accounts for 10 per cent of its total sales.
On Wednesday before the bell, the company reported a 4-per-cent drop in Asia-Pacific construction equipment sales
“CAT has most exposure to China in their construction industry business and that business was just a bit disappointing on revenue and margins,” Jefferies analyst Stephen Volkmann told Reuters.
Overall, it reported an adjusted profit of US$2.94 per share for its first quarter, ahead of the US$2.82 result during the same period a year ago but below the Street’s expectation of US$2.85.
Shares of Tesla Inc. (TSLA-Q) sat 2.1 per cent lower ahead of the much-anticipated release of its quarterly results after the bell.
On Wednesday morning, U.S. electric pickup truck startup Rivian Automotive LLC said Ford Motor Co. (F-N) has invested US$500-million in the company, which is seen as one of the major rivals to Tesla.
Ford and Rivian will jointly develop a battery electric vehicle using Rivian’s platform, Rivian said.
Shares of Ford rose 0.2 per cent.
With files from staff and wires
David Leeder