A survey of North American equities heading in both directions
On the rise
Shares of Canadian Tire Corp. Ltd. (CTC-A-T) rose 3.6 per cent after it said on Wednesday it would sell its premium activewear business Helly Hansen to Kontoor Brands (KTB-N) for $1.28-billion, as part of efforts to focus on its core business.
The transaction is expected to close in the second quarter, the company said. Canadian Tire expects to continue selling Helly Hansen products under a multi-year supply agreement.
The company expects to use the deal proceeds for share repurchases, to cut debt and to drive growth in its core Canadian retail business.
Canadian Tire, which sources about 15 per cent of its goods directly from the U.S., said earlier this month that increasing inflationary pressures sparked by President Donald Trump’s tariff threats would retain pressure on spending.
From Feb. 13: Canadian Tire CEO voices concern over hit to consumer demand from tariff threats
The retailer, struggling with sluggish discretionary spending, had also said it was reviewing U.S. products and suppliers while seeking alternatives to rising cost pressures.
Kontoor Brands, the owner of jeans brands Lee and Wrangler, has reported demand recovery, thanks to growth in its global direct-to-consumer segment as well as wholesale business in the U.S.
Shares of AtkinsRéalis Group Inc. (ATRL-T) were higher by over 5 per cent after the late Tuesday announcement of the US$300-million acquisition of a 70-per-cent stake in David Evans Enterprises, Inc., a Portland, Oregon-based employee-owned engineering and staff augmentation services firm.
The Montreal-based company said there is also “a clear path to entire ownership within a defined agreed time period.” The deal is expected to be completed in the first half of 2025.
National Bank analyst Maxim Sytchev said: “David Evans is a private company; as a result, it’s hard to comment regarding the quality of capabilities at this point; a 12 times EV/EBITDA multiple seems to be reasonable (pre-synergies) given the prevailing market conditions and relatively small size of the asset in context of larger deals we would have seen over the last few years. At the same time, we also should not underplay the significance of committing incremental capital to M&A, suggesting the rest of the mothership has to be operating well in order for management to spend time on integration (that’s at least a bullish interpretation). We still believe that a much bigger deal in the U.S. would be coming following a 407 ETR divestiture. Shares of ATRL have been weak year-to-date (down 9 per cent vs. up 4 per cent for the TSX and S&P 500) in context of the market and vs. direct CAD peers (at some point ATRL’s valuation approached that of WSP). Recall of course that ATRL had a massive 2024 (shares are up 59 per cent LTM [last 12 months] vs. 21 per cent for the TSX and 22 per cent for the S&P 500) and such moves require some settling even in context of a very positive nuclear backdrop which we believe has to be counterbalanced somewhat by much tougher Middle Eastern comps. Below $70, we believe investors are facing a positive risk /reward skew in ATRL shares. We rate ATRL shares Outperform with an $87.00 price target, derived using a SoTP valuation where we attribute a 14.0 times EV/EBITDA multiple to the core Engineering Services Regions and Nuclear verticals with a 4.0 times multiple for the Linxon business, as well as $10.96/share for the company’s 407 ETR stake and $2.57/share for the remaining concession assets.”
Bausch + Lomb Corp. (BLCO-T) gained ground with the premarket release of strong fourth-quarter results while full-year guidance was narrowly under expectations.
Before the bell, the Vaughan, Ont.-based company reported revenue of US$1.28-billion, up 9.1 per cent year-over-year and 1.8 per cent higher than the Street’s expectation of US$1.26-billiuon Adjusted earnings per share of 25 US cents was 2 US cents higher than the consensus expectation.
Management now expects 2025 revenue of US$4.95-billion to US$5.05-billion with the midpoint of US$4.98-bilion falling 1.1 per cent under analysts’ expectation. Its EBITDA guidance of US$925-million also fell short of the consensus (US$952-million).
“Net-net, we believe the broad strength delivered across its core franchises will be viewed positively by investors,” said Citi analyst Joanne Wuensch, who called the quarterly results “strong” and thinks the guidance “looks good.”
Montreal’s Gildan Activewear Inc. (GIL-T) increased 4.1 per cent with the premarket release of stronger-than-anticipated fourth-quarter 2024 financial results and the introduction of 2025 guidance that also met expectations.
The clothing manufacturer reported revenue of US$822-million for the quarter, up 5 per cent year-over-year and above the Street’s projection of US$804-million driven by activewear gains. Adjusted earnings per share of 83 US cents was an 11-per-cent jump and also topped the consensus by 2 US cents despite a lower-than-expected tax rate.
Gildan also introduced full-year EPS guidance of US$3.38-US$3.58, falling in line with analysts’ forecast of US$3.46.
“The high-point of the EPS guidance represents a potential EPS increase of 19 per cent year-over-year, which would result in the fastest growth rate of the last three years,” said Stifel analyst Martin Landry. “The company announced management changes with Chuck Ward being promoted to EVP COO and Rhodri Harries currently EVP CFO to retire at the end on this year with Luca Barile to succeed him. We believe the shares will react well to these results and the guidance, which at the high-end suggests an acceleration of EPS growth rates.”
Loblaw Co. Ltd. (L-T) closed up 0.2 per cent after it said on Wednesday it plans to invest $2.2-billion this year to renovate existing stores, open new outlets and create about 8,000 jobs.
The company, which operates pharmacy chains including Shoppers Drug Mart and discount banners including No Frills and Maxi, said last year it expects to invest $2-billion to create about 7,500 jobs.
The announcement comes a day ahead of Loblaw’s fourth-quarter results.
The company also expects to invest more than $10-billion over the next five years, it said.
The investment adds to the more than $8-billion it has invested since 2020 into improving and expanding its network of stores and modernizing its supply chain.
The retailer missed third-quarter revenue estimates in November, hurt by a demand slowdown for its household items and electronics.
RioCan Real Estate Investment Trust (REI.UN-T) was higher by 3.6 per cent after saying it earned $125.6 -million in the fourth quarter compared with a loss of $117.7-million a year earlier as it reported a much smaller writedown on its investment properties.
The company says the profit came as it had record-high occupancy rates, including retail committed occupancy of 98.7 per cent.
RioCan’s swing to profit came as it recorded a $29.4-million reduction in the fair value of its investment properties in the quarter, far less than the $450.4-million writedown a year earlier.
The net income worked out to 42 cents per diluted unit, compared with a loss of 39 cents per diluted unit last year.
Funds from operation per diluted unit amounted to 45 cents, up from 44 cents per diluted unit a year earlier.
RioCan says it increased its monthly distribution to unitholders by 4.3 per cent to 9.65 cents per unit.
Analog Devices Inc. (ADI-Q) topped first-quarter Wall Street expectations for revenue and profit on Wednesday, driven by a recovery in chip demand, particularly in the consumer segment, sending its shares up 9.7 per cent.
The company provides semiconductors to a variety of industries, including aerospace, automotive, communications, digital healthcare and industrial automation.
Wilmington, Massachusetts-based Analog Devices’ consumer segment revenue rose 19 per cent to US$322.9-million, compared with a year earlier.
The demand in consumer electronics was driven by adoption of AI-driven devices, premium smartphones and smart home products.
The company’s first-quarter revenue stood at US$2.4-billion, beating analysts’ estimate of US$2.36-billion, according to data compiled by LSEG.
Bookings continued to show gradual improvement during the first quarter with strength in industrial and automotive, positioning the company to grow in the second quarter, Chief Executive Vincent Roche said in a statement.
The company expects second-quarter revenue of US$2.50-billion, plus or minus US$100-million, compared to estimates of US$2.46-billion.
The chipmaker expects adjusted earnings per share of US$1.68, plus or minus 10 US cents, in the current quarter, compared with estimates of US$1.66.
On the decline
Despite reporting fourth-quarter results fell in line with expectations, shares of Hudbay Minerals Inc. (HBM-T) were lower by over 13 per cent after its 2025 production guidance disappointed.
The Toronto-based miner now expects copper production of 133,000 tonnes at the midpoint of its guidance range, largely stable with 2024 levels (133,000 tonnes) while the Street had projected 155,000 tonnes. It sees gold production sliding from the last fiscal year to 277,750 ounces, missing the previous consensus projection of 309,000 ounces
For the fourth quarter, it recorded adjusted earnings per share of 18 US cents, matching analysts’ forecast.
“HBM reported solid Q4/24 results delivering on copper production and exceeding expectations on gold. Adjusted EPS was a slight beat and would have been stronger had sales not lagged production. 2025 production guidance; however, was well below last year’s target range and below ours and consensus estimates. Despite solid Q4 results, we expect shares will react negatively to the weaker 2025 guide,” said TC Cowen analyst Craig Hutchison.
Troubled electric vehicle maker Nikola (NKLA-Q) plummeted after it said on Wednesday it had filed for Chapter 11 bankruptcy protection and would pursue a sale of all or most of its assets, after grappling with rapid cash burn and struggling to raise funds in the past few quarters.
The development brings a close to a challenging journey, which included numerous leadership changes, choppy sales and a plummeting share value.
EV firms that went public during the pandemic, promising to revolutionize the sector, such as Fisker, Proterra and Lordstown Motors have filed for bankruptcy in recent years as funding for the capital-intensive operations dried up due to high interest rates and flagging demand.
Nikola said it decided to initiate a sale process of its assets to maximize value and ensure an orderly wind down.
The firm will continue some operations for trucks in field and some hydrogen-fueling operations through the end of March.
The company listed assets of between US$500-million and US$1-billion, and estimated its liabilities were between US$1-billion and US$10-billion, according to a court filing.
Phoenix, Arizona-based Nikola was founded more than a decade ago. It went public in June 2020 and delivered its first vehicle in the December of the following year.
Etsy (ETSY-Q) missed Wall Street estimates for holiday-quarter revenue and gross merchandise sales, hurt by weak spending on gifts and handcrafted goods, sending shares of the online marketplace down 10 per cent on Wednesday.
Sticky inflation and competition from other online shopping platforms such as Amazon.com and PDD Holdings’ Temu have hurt Etsy’s revenue as consumers opted for lower prices and discounts.
While consumer spending grew in the last three months of the year, according to the U.S. Commerce Department’s Bureau of Economic Analysis, demand for products such as furniture and accessories was weak as people prioritized essentials.
Etsy posted consolidated GMS — a key metric to measure sales — of US$3.74-billion for the quarter ended December 31, compared with analysts’ estimates of US$3.88-billion according to data compiled by LSEG.
It posted quarterly revenue of US$852.2-million, compared with analysts’ expectations of US$862.8-million.
The company also forecast first-quarter GMS to decrease 6.8 per cent from a year earlier, a similar rate of decline as seen in the last three months of 2024.
However, Etsy earned US$1.03 per share in its fourth quarter, beating expectations of 93 US cents.
Bumble’s (BMBL-Q) shares fell 30.3 per cent Wednesday after the dating app operator forecast first-quarter revenue below market estimates, as it continues to grapple with a slowdown in the growth of paying users.
Shares of the Austin, Texas-based company have slumped about 40 per cent over the past 12 months. Bumble recently announced executive changes including the return of its founder Whitney Wolfe Herd as its chief executive in March.
Over the past year, the company has cut jobs, refreshed its Bumble app and expanded its signature “make the first move” feature to include “opening moves” that allow women to set a question that their potential matches can respond to for better conversations.
“There’s clearly more work to be done on the turnaround and we see visibility limited as management did not provide full-year guidance for the first time,” Citi analyst Ygal Arounian said.
As of last close, Bumble’s valuation stood at US$876.3-million compared with Tinder-parent Match Group’s (MTCH-Q) US$8.85-billion.
Bumble said it would discontinue its Fruitz and Official dating apps by the first half of this year. “As we prioritize the execution of the important work we’re undertaking to reposition Bumble App, we have taken a hard look at how we’re allocating our resources across our portfolio,” said departing CEO Lidiane Jones.
At least six brokerages cut their price target on Bumble after its latest earnings report.
Bumble currently trades at 9.98 times the estimates of its earnings for the next 12 months, compared with 16.51 times for bigger rival Match Group.
U.S.-listed shares of soccer giant Manchester United (MANU-N) slipped 3.7 per cent after it reported an adjusted net loss of 6.2-million pounds (US$7.80-million) in the second quarter, hurt by lower revenue as the club played the less lucrative Europa instead of the Champions League competition this season.
“We recognize the challenges in improving our men’s team’s league position and we are all working hard, collectively, to achieve that,” CEO Omar Berrada said in a statement on Wednesday.
The club currently sits in the 15th position on the Premier League table, only three places away from the relegation zone.
The company’s revenue in the quarter ended December 31 fell 12 per cent to 198.7 million pounds, resulting in an adjusted net loss, compared with a profit of 19.3 million pounds a year ago.
The Premier League soccer club, however, forecast an annual adjusted core profit at the top end of the club’s previous range of 145 million pounds to 160 million pounds, while keeping its full-year revenue forecast unchanged.
GameStop Corp. (GME-N) dipped 3.6 per cent after saying it intends to pursue a sale of its Canadian and French operations.
The video game retailers says in a press release that the move is part of an evaluation of its international assets.
GameStop did not provide any further detail on the decision.
CEO Ryan Cohen posted to X earlier in the day that the two business arms were for sale, adding: “High taxes, Liberalism, Socialism, Progressivism, Wokeness and DEI included at no additional cost if you buy today!”
GameStop did not immediately respond to a request for comment on the sales and Mr. Cohen’s post.
As of about a year ago, GameStop had 203 locations in Canada.
Mr. Cohen has been CEO of the company since 2023. At the time, he was already the board chair and the company’s largest individual investor.
At the company’s annual shareholder meeting last June, Mr. Cohen said GameStop was going to focus on cutting costs and long-term profitability, which would involve a smaller store network.
The company earned US$17.4-million in its third quarter, compared with a loss during the same quarter a year earlier. Its sales declined to US$860.3-million.
GameStop was one of the companies at the centre of the “meme stock” craze on Wall Street, which saw struggling brands’ share prices soar as retail investors made risky bets.
With files from staff and wires