News Column

Toronto up on earnings news

February 19, 2014



Oil tidings provide spark







The Toronto stock market improved amid a major oilpatch acquisiton along with earnings disappointments and dividend cuts in the resource sector.

The S&P/TSX composite index gained 51.18 points to greet noon at 14,128.65

The Canadian dollar dropped 0.79 cents to 90.53 cents U.S.

On the Toronto market, a major gainer was Cargojet as its shares jumped $3.54, or 24.7%, to $17.90. The cargo carrier has been awarded a domestic air cargo network services contract for the Canada Post group of companies, including Purolator's national air cargo network.

The company projects revenues will be approximately $1 billion during the initial seven-year agreement, based on projected volumes.

On the earnings front, Sherritt International Corp. reported a $38.1-million adjusted net loss in the fourth quarter, equal to 13 cents per share as it recognized a $466.8 million impairment loss related to the sale of its coal business. Analysts had expected Sherritt's adjusted earnings would break even.

Sherritt cut its quarterly cash dividend to one cent from about four cents per share. Its shares fell 30 cents, or 8.8%, to $3.13.

Yamana Gold posted a quarterly net loss of $583.9 million U.S. or 78 cents per share, compared with a net profit of $169.2 million U.S. or 23 cents per share a year ago. Its shares added two cents to $11.54 as the miner also cut its quarterly dividend almost in half to 3.75 cents per share.

Power producer Boralex Inc. said its quarterly cash flow from operations was $16.1 million or 43 cents per share, up from $13.5 million or 36 cents per share a year ago. Boralex will also pay its first dividend, 13 cents per shares. Its shares ran ahead 87 cents, or 7%, to $13.25.

The energy sector advanced, while Canadian Natural Resources Ltd. jumped $1.81, or 4.6%, to $40.99 as it said that it will pay $3.125 billion cash to buy conventional oil and gas assets near its core areas in Western Canada in a major land deal with Devon Canada.

On the economic front, Statistics Canada reported that wholesale trade for December stumbled 1.4% to $49.6 billion, a six-month low. Of the seven wholesale sub-sectors, five were down, representing 79% of wholesale sales.

ON BAYSTREET

The TSX Venture Exchange hiked 8.42 points to 1,010.87.

The 14 Toronto subgroups were evenly divided between gainers and losers, with energy stocks ahead 1%, global base metals up 0.9%, and real-estate stocks up 0.6%.

The seven laggards were weighed by gold stocks, down 0.7%, health-care, down 0.5%, and consumer staples, sliding 0.4%.

ON WALLSTREET

Stocks were mixed in early trading Wednesday, as investors grappled with disappointing economic data and awaited minutes from the Federal Reserve's last meeting.

The Dow Jones Industrial Average erased 25.52 points to 16,156.22 midday.

The S&P 500 index subsided 3.56 points to 1,837.20. The NASDAQ dipped 18.42 points to 4,254.36.

The broader market may be down. But some prominent stocks were moving higher. Shares of Zale surged about 40% after Signet Jewelers unveiled a deal to acquire the Dallas-based jewelry retailer for $21 a share. Signet shares soared nearly 13%.

GPS device maker Garmin reported an increase in quarterly earnings on a slight drop in revenue, sending shares up 10%.

Spirit Airlines shares gained ground after the discount airline said that it more than doubled its adjusted net income for the quarter.

On the downside, Herbalife shares slipped even after the controversial seller of nutrition products, reported a double-digit percentage jump in quarterly profit, fueled by sales in China. Hedge fund manager Bill Ackman has been claiming that Herbalife is a pyramid scheme and has been betting against the company for over a year.

Tesla will report results after the close. The electric car maker already said it sold a higher number of its Model S sedan in the fourth quarter. Investors are hoping for more news from CEO Elon Musk about plans to expand in China and introduce new models.

On the economic front, housing starts fell sharply in January, as bad winter weather took a hit on construction.

Investors were also cautious ahead of the U.S. Federal Reserve's minutes from its January meeting, when the central bank decided to further reduce, or taper, its monthly bond purchases. That was also Ben Bernanke's final meeting as Fed chairman.

Though last month's decision to continue to cut back on its stimulus measures was unanimous among the Fed's 10 voting members, investors will be looking for hints on how the Fed may act in future months.

New Fed chair Janet Yellen strongly suggested in testimony before the House last week that she was likely to stick with the Fed's current plan to gradually taper.

Prices for 10-year U.S. Treasuries gained ground, lowering yields to 2.70% from Tuesday's 2.71%. Treasury prices and yields move in opposite directions

Oil prices inched up 34 cents to $102.77 U.S. a barrel.

Gold prices slid $5.20 to $1,319.20 U.S. an ounce.


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Source: Baystreet Stock Market Update (Canada)


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