News Column

Toronto stock market heads for higher open, Royal Bank posts strong earnings

February 26, 2014

By Malcolm Morrison

TORONTO _ The Toronto stock market was set to advance Wednesday amid a strong earnings report from Royal Bank (TSX:RY) and mixed results from key retailers.

The Canadian dollar was off 0.03 of a cent to 90.17 cents US.

U.S. futures were higher ahead of the mid-morning release of new home sales figures. Economists think the unusually tough winter conditions will also affect this set of data with sales expected to decline about four per cent to an annualized pace of 398,000. But they also note that the sector is suffering from last year's spike in mortgage rates.

The Dow Jones industrial futures were up 11 points to 16,198, the Nasdaq futures rose 2.8 points to 3,691.3 while the S&P 500 futures climbed 1.75 points to 1,848.

Royal Bank of Canada (TSX:RY) says its first-quarter net income was up two per cent from a year ago to $2.09 billion or $1.38 a share. Ex-items, RBC earned $1.47 a share, which was above estimates. The bank also announced its quarterly dividend will increase by six per cent to 71 cents per common share.

Bank of Montreal (TSX:BMO) and National Bank (TSX:NA) also issued earnings reports this week that beat expectations.

TD Bank (TSX:TD) and CIBC (TSX:CM) issue earnings results Thursday while Scotiabank (TSX:BNS) posts earnings next Tuesday.

The news wasn't so great from the retailing segment as Sears Canada Inc. (TSX:SCC) had a $373.7 million net profit in its fiscal fourth quarter, up from $39.9 million a year earlier. But the showing was largely due to gains from unusual items including early lease terminations for some large stores that are closing. Revenue fell nearly $129 million or about 10 per cent to just under $1.17 billion.

Target Corp says the massive data breach over the holidays helped push its profit down 46 per cent to $520 million or 81 cents a share, beating estimates by a penny. Revenue of $21.5 billion met expectations and its shares ticked up 0.4 per cent in pre-market trading.

Home improvement retailer Lowe's fared much better. The housing market recovery helped push fiscal fourth-quarter net income up six per cent to $306 million or 29 cents a share. Ex-items, earnings were 31 cents per share, which matched expectations. Revenue rose six per cent to $11.66 billion, slightly missing forecasts of $11.67 billion but its shares ran up 3.5 per cent in pre-market trading.

ABInBev SA, the largest global brewer, reported a 45 per cent increase in quarterly profits to $2.52 billion on a mix of acquisitions, growth, and cost-cutting. Sales at Amsterdam-based ABInBev rose 4.6 per cent to $11.7 billion.

Commodity prices were mixed with the April crude contract in New York up 60 cents to US$102.43 a barrel.

March copper was unchanged at US$3.26 a pound while April bullion fell $11.70 to US$1,331 an ounce.

European markets were lower with London'sFTSE 100 and Frankfurt's DAX down about 0.35 per cent while the Paris CAC 40 lost 0.5 per cent.

Earlier in Asia, Japan's Nikkei 225 stock average closed down 0.5 per cent and Hong Kong's Hang Seng gained 0.5 per cent.

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Source: Canadian Press DataFile

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