A survey of North American equities heading in both directions
On the rise
Shares of shale producer Ovintiv (OVV-T) rose 5.5 per cent after it announced a US$2.38-billion all-cash acquisition of oil assets from Paramount Resources (POU-T) on Thursday, expanding its presence in Canada’s Montney shale play.
The shale formation, a 50,000-square-mile (32-million acre) area spanning northern Alberta and British Columbia, is considered one of Canada’s most attractive oil and gas-producing regions due to its strong economics.
“The assets come with ample midstream capacity, unlocking optionality for mid-single digit growth in our Montney volumes... with this acquisition, we have solidified our position as the premier operator in the play,” CEO Brendan McCracken said in a statement.
The assets are located near Ovintiv’s current operations and will add nearly 70,000 barrels of oil equivalent per day of production at the Montney formation in Alberta, along with about 900 net well locations.
Upon the deal’s completion, Ovintiv expects overall total annual production volumes of about 620,000 boepd as well as oil and condensate production volumes of 205,000 barrels per day.
The company said it will also sell its Uinta Basin assets in Utah to FourPoint Resources for US$2-billion.
Both transactions, which are expected to close by the first quarter of 2025, are likely to be immediately accretive for Ovintiv, increasing its adjusted free cash flow by about US$300-million in 2025.
Ovintiv will allocate about 85 per cent to 90 per cent of its total capital to operations in the Permian and Montney shale plays, the company said.
It will finance the Montney acquisition through a combination of cash proceeds received from the sale of its Uinta assets, cash on hand and borrowings under its credit facility or temporary financing, Ovintiv said, adding that it has paused its share buyback program until the cash borrowed under the temporary financing is recovered.
The company expects to resume the buybacks in the second quarter of 2025.
Montreal-based AtkinsRealis Group Inc. (ATRL-T) soared 15.7 per cent after it reported its third-quarter profit edged lower compared with a year ago when it benefited from a gain on the sale of its Scandinavian engineering services business.
The engineering services firm says it earned net income attributable to shareholders of $103.7-million or 59 cents per diluted share for the quarter ended Sept. 30.
The result was down from $105.0-million or 60 cents per diluted share in same quarter last year, when it posted a gain on the sale of its Scandinavian engineering business, Systra Group, to a French consulting firm.
On an adjusted basis, AtkinsRealis says its professional services and project management business earned 63 cents per diluted share, up from an adjusted profit of 38 cents per diluted share a year ago.
Revenue for the quarter totalled $2.45-billion, up from $2.20-billion in the same quarter last year.
The company says its services backlog was $16.84-billion at Sept. 30, up from $12.50-billion a year earlier, while its lump-sum turnkey project backlog was $190.1-million, down from $305.2-million a year ago.
In a research note, Desjardins Securities analyst Benoit Poirier said: “We are very pleased with the results at first glance and expect a positive trading reaction given the beat across the board, margin improvement and stronger-than-expected FCF leading to a nice step-down in leverage.”
Brookfield Corp. (BN-T) was up 0.8 per cent after it reported its third-quarter distributable earnings totalled US$1.33-billion, up from $1.15-billion in the same quarter a year ago.
The global investment firm says its distributable earnings amounted to 84 US cents per share for the quarter ended Sept. 30, up from 73 US cents per share a year ago.
Distributable earnings before realizations amounted to 80 US cents per share in the company’s latest quarter, up from 67 US cents per share in the same quarter last year.
Brookfield president Nick Goodman says the company’s financial performance in the third quarter was strong, delivering record cash earnings from its base businesses.
Revenue for the quarter totalled US$20.62-billion, down from US$24.44-billion in the same quarter last year.
Brookfield reported US$64-million or a 1 US cent per share in net income attributable to its shareholders for its third quarter, down from US$230-million or 12 US cents per share in the same quarter last year.
Walt Disney (DIS-N) reported earnings that topped Wall Street’s estimates, propelled by blockbuster ticket sales from the rude and irreverent summer Marvel film Deadpool & Wolverine, and provided an upbeat forecast for the coming year.
Shares of the company jumped 6.2 per cent in Thursday trading.
The company projected adjusted earnings-per-share percentage growth in the high single digits in fiscal 2025, even with capital expenditures of roughly US$8-billion. It also said it expects to buy back US$3-billion worth of stock.
The entertainment giant’s recent success at movie theaters helped offset a decline in operating income at the company’s Experiences and Sports divisions. Lower attendance at international locations dragged on theme parks results, and higher programming and production costs hurt ESPN.
Disney reported adjusted per-share earnings of US$1.14 for its fiscal fourth quarter that ended in September. That compares with consensus estimates of US$1.10 per share, according to analysts polled by LSEG.
Revenue reached US$22.6-billion, slightly ahead of Wall Street forecasts of US$22.45-billion. Operating income rose 23 per cent from a year earlier to nearly US$3.7-billion.
Chief Executive Bob Iger, who returned to the company from retirement in November 2022, undertook aggressive cost-cutting and worked to revitalize the company’s film and TV units after a period of misfires.
“Thanks to the significant progress we’ve made, we have emerged from a period of considerable challenges and disruption well positioned for growth and optimistic about our future,” Mr. Iger said in a statement.
Disney last month said it would name a new chief in early 2026. The new boss would replace Mr. Iger, who returned to the company to take the top job after the board fired his handpicked CEO.
Operating income at the Entertainment unit, which includes film, television and streaming, more than doubled to US$1.1-billion in the quarter, reflecting the return of Hulu’s Emmy-nominated comedy Only Murders in the Building and summer movies including Deadpool & Wolverine, the first R-rated Marvel film, and Alien: Romulus. The Deadpool movie brought in US$1.3-billion at global box offices.
Disney’s flagship streaming video service, Disney+, boasted more than 122.7 million subscribers outside of India, a gain of 4.4 million from the prior quarter. The company intensified efforts to crack down on password sharing in September.
In addition to the fiscal 2025 projection, Disney said it expected double-digit adjusted EPS growth in fiscal years 2026 and 2027.
“If you add it all up, our strategies are working, working very well, and we’ve got good visibility on where those strategies are likely to lead us,” Disney CFO Hugh Johnston said in an interview.
Tapestry (TPR-N) said it was terminating its US$8.5-billion bid for Michael Kors owner Capri (CPRI-N) after a legal hurdle last month, ending their effort to create a U.S. luxury giant to compete with major European players.
Shares of both companies saw large gains on Thursday.
The deal would have brought six brands under one roof: Tapestry’s Coach, Kate Spade and Stuart Weitzman; and Capri’s Versace, Jimmy Choo and Michael Kors. But regulators sued to block the deal earlier this year, citing anti-competition concerns.
The merger was blocked last month after the U.S. Federal Trade Commission (FTC) argued that it would eliminate head-to-head competition between the top two handbag makers and create a massive company with the power to unfairly raise prices.
The companies said on Thursday they mutually agreed that ending the merger agreement was in their best interest, as the outcome of the legal process was uncertain and unlikely to be resolved by Feb. 10, the deal deadline.
“We have always had multiple paths to growth and our decision today clarifies the forward strategy,” Tapestry CEO Joanne Crevoiserat said.
The company said it does not expect any acquisitions in the near term and has agreed to reimburse Capri’s expenses of about US$45-million, incurred in connection with the merger.
Tapestry, which halted its merger plans last week as it appealed the U.S. judge’s decision, has raised its 2025 profit forecast after posting strong quarterly results.
Capri, on the other hand, has reported several straight quarters of sales decline since the deal was announced in August last year.
Advance Auto Parts (AAP-N) said on Thursday it will close about 500 stores by mid-2025 and cut some jobs under a restructuring effort, as demand for vehicle parts takes a hit from fewer consumers opting to repair their cars.
Shares of the auto parts retailer were higher by 0.6 per cent despite also reporting a surprise third-quarter adjusted loss of 4 US cents per share.
Analysts on average were expecting a profit of 49 US cents, according to data compiled by LSEG.
The automotive industry has had a difficult second half of the year, burdened by inflationary headwinds and stiff competition from Chinese automakers putting out affordable yet feature-packed vehicles.
Auto suppliers such as Aptiv PLC (APTV-N) and BorgWarner (BWA-N) cut their annual sales forecasts last month on expectations of lower vehicle production as consumers cut back on purchases.
As part of its turnaround efforts, Advance Auto Parts announced plans to close 523 corporate stores, exit 204 independent locations, and shutter four distribution centers by mid-2025. The company aims to improve its adjusted operating income margin by over 500 basis points through fiscal 2027.
It expects to incur about US$350-million to US$750-million of total costs related to the restructuring.
Separately, the North Carolina-based company said it expects 2024 earnings from continuing operations of between a loss of 60 US cents per share and breakeven, compared with estimates for an adjusted profit of US$2.16 per share.
On the decline
Montreal-based Dorel Industries Inc. (DII.B-T) plummeted 11.6 per cent after it reported its third-quarter loss in its latest quarter more than doubled compared with a year ago as its revenue edged lower.
The maker of furniture and baby gear, which keeps its books in U.S. dollars, says it lost US$21.9-million or 67 US cents per diluted share for the quarter ended Sept. 30.
The result compared with a loss of US$10.4-million or 32 US cents per diluted share in the same quarter last year.
Revenue totalled US$354.2-million, down from US$359.7-million a year ago.
Dorel chief executive Martin Schwartz said the company’s home business faced significant challenges, resulting in a 14-per-cent decline in revenue for the segment compared with the same period last year.
On an adjusted basis, Dorel says it lost 62 US cents per share in its latest quarter compared with an adjusted loss of 32 US cents per share in the same quarter last year.
Facebook parent Meta (META-Q) was lower after European Union regulators hit it with a fine of nearly 800 million euros on Thursday for what they call “abusive practices” involving its Marketplace online classified ads business.
The European Commission, the 27-nation bloc’s executive branch and top antitrust enforcer, issued the 797.72 million euro (US$841-million) penalty after its long-running investigation found that the company abused its dominant position and engaged in anti-competitive behavior.
Brussels had accused Meta of distorting competition by tying its online classified ad business to its social network, automatically exposing Facebook users to Marketplace “whether they want it or not” and shutting out competitors.
It was also concerned that Meta was imposing unfair trading conditions with a terms of service that authorized the company to use ad-related data — generated from competitors who advertise on Facebook or Instagram — to benefit Marketplace.
Meta said in a statement that the decision fails to prove any “competitive harm” to rivals or consumers and “ignores the realities of the thriving European market for online classified listing services.” The company vowed to appeal.
Chinese e-commerce group JD.com (JD-Q) missed market estimates for quarterly revenue on Thursday, as a persistent slowdown in the world’s second-largest economy pressured consumers to keep a tight hold on their purse strings.
JD.com’s U.S. shares fell 6.6 per cent.
A prolonged property sector crisis, a macroeconomic slowdown and heightened job insecurity have hammered consumer confidence in China, hurting retail sales and resulting in a bruising price war among major e-commerce platforms.
JD.com has been working to improve its share of sales from high-growth livestreamed e-commerce, as well as exploring international business growth, but trails rivals such as Alibaba in livestreaming and Temu-owner PDD Holdings in tapping overseas sales.
While the Chinese government has outlined stimulus measures to prop up economic growth, the lack of solid steps to boost consumption has also weighed on sentiment.
JD.com said total revenue rose 5.1 per cent to 260.4 billion yuan (US$35.95-billion) in the third quarter, compared with estimates of 261.45 billion yuan, according to LSEG data.
Net income attributable to JD.com’s ordinary shareholders stood at 11.7 billion yuan in the July-September period, an increase of 47.8 per cent from a year earlier.
This period coincides with a traditional lull in Chinese consumption between major shopping festivals in June and November.
A bid to lure more customers in one of the year’s quietest shopping periods in China may be behind an increase of 25.7 per cent for marketing expenses, which reached 10 billion yuan or 3.8 per cent of net revenue for the quarter, compared to 3.2 per cent a year earlier.
Cisco Systems (CSCO-Q) forecast quarterly revenue and profit above Wall Street estimates after posting upbeat first-quarter results, helped by improving demand for its networking gear amid the AI boom.
Shares of the computer networking equipment maker were down 2.1 per cent in Thursday trading after the company forecast annual revenue broadly in line with estimates.
Companies have been ramping up investments in AI technologies which require heavy computing power, creating a spike in demand for data centers, which use Cisco’s products such as ethernet switches and routers.
However, the California-based company has been trying to reduce reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.
The company had announced two rounds of layoffs this year in a bid to cut costs, as it shifts focus to cybersecurity, cloud systems and AI-driven products.
Cisco completed its US$28-billion acquisition of Splunk in March, which aims to boost its software business amid an AI boom while also helping to offset a post-pandemic slowdown in demand by enhancing its cybersecurity capabilities.
The company expects second-quarter revenue to be between US$13.75-billion and US$13.95-billion, which was above analysts’ average estimate of US$13.73-billion, according to LSEG-compiled data.
It forecast quarterly adjusted profit per share of 89 US cents to 91 US cents, compared with estimates of 87 US cents.
The company’s revenue fell 6 per cent to US$13.84-billion in the first quarter ended Oct. 26, beating estimates of US$13.77-billion. Adjusted profit per share of 91 US cents also beat estimates of 87 US cents.
Cisco now expects annual revenue to be between US$55.3-billion and US$56.3-billion, compared with its earlier forecast of between US$55.0-billion to US$56.2-billion. Analysts were expecting US$55.89-billion.
It raised its annual adjusted profit forecast range to US$3.60 to US$3.66, from US$3.52 to US$3.58.
With files from staff and wires