A survey of North American equities heading in both directions
On the rise
Shares of Calgary-based Vermilion Energy Inc. (VET-T) gained 2.1 per cent on Thursday after it raised its dividend as it outlined a capital spending plan of $600-million to $625-million for 2025.
The company says it will pay a quarterly dividend of 13 cents per share, up a penny from 12 cents per share.
Vermilion says its capital budget includes drilling and infrastructure across its business.
The plan will see ongoing drilling and debottlenecking in the B.C. Montney region and European gas exploration and development in Germany, the Netherlands, and central and eastern Europe.
Production for 2025 is expected between 84,000 and 88,000 barrels of oil equivalent per day.
The outlook represents an increase of two per cent based on the midpoint compared with its original production guidance for 2024.
Lithium Royalty Corp. (LIRC-T) surged 11.7 per cent on the premarket announcement of a definitive agreement with Triple Flag Precious Metals Corp. (TFPM-T) to sell a 0.5-per-cent gross overriding revenue royalty over the Tres Quebradas lithium brine project in Catamarca, Argentina for total cash consideration of $28-million.
Following the deal, Toronto-based Lithium Royalty will continue to hold a net aggregate 0.9-per-cent gross overriding revenue royalty over the Tres Quebradas project.
“The partial sale of the royalty highlights the intrinsic value of the Tres Quebradas royalty and shines a favourable light on our portfolio value as a whole,” said its CEO Ernie Ortiz.
“LRC intends to use a portion of the sale proceeds to repurchase common shares and will explore the use of a Substantial Issuer Bid. Given the significant discount that LRC’s shares trade relative to their net asset value, we believe that repurchases could be materially accretive to net asset value and cash flow per share in the future, starting in 2025. The transaction also reloads our balance sheet and enables LRC to acquire additional royalties on top tier lithium assets, at what we believe to be the bottom in the lithium cycle”.
IT service provider Accenture (ACN-N) beat Wall Street estimates for first-quarter revenue on Thursday, on the back of growing demand for its services to help clients adopt AI-powered tools.
Shares of the company rose on the news
Businesses are investing heavily to scale their AI projects and digitize their core operations to boost efficiency and cut costs, which is helping companies such as Accenture.
The company’s new bookings rose to US$18.7-billion for the first quarter from US$18.4billion a year earlier.
Ahead of the results, analysts said tech budgets for fiscal year 2025 will likely improve which bodes well for IT service providers such as Accenture and EPAM.
Accenture’s GenerativeAI business recorded new bookings of US$1.2-billion, whereas its consulting and outsourcing segments reported US$9.2-billion and US$9.5-billion, respectively.
Its first-quarter revenue stood at US$17.7-billion, beating analysts’ estimates of US$17.12-billion, according to data compiled by LSEG.
The company expects annual revenue to grow between 4 per cent and 7 per cent, compared with analysts’ expectations of 5.63 per cent. It had earlier forecast growth of 3-6 per cent.
Darden Restaurants (DRI-N) raised its annual sales forecast on Thursday, banking on higher menu prices and more people dining at its chains including LongHorn Steakhouse and Olive Garden in the holiday season, sending its shares up.
Restaurants chains such as Cava (CAVA-N), Shake Shack (SHAK-N) and Chipotle Mexican (CMG-N) have grown in popularity as runaway fast-food prices have narrowed the cost gap to casual dining chains.
Easing inflation has also prompted middle- and higher-income consumers to dine out more heading into the holiday season.
Darden’s sequential price hikes, combined with steady demand and footfall, have helped the restaurant chain maintain profits, even as costs, including the prices of meat and labor, have risen.
For the full year, the company expects sales of about US$12.1-billion, compared with the previous US$11.8-billion to US$11.9-billion forecast.
Same-store sales at the Olive Garden chain rose 2 per cent after three consecutive quarters of decline. In the year-ago quarter, sales grew 4.1 per cent.
LongHorn Steakhouse’s same-store sales rose 7.5 per cent, compared with a 4.9-per-cent rise a year ago.
For the second quarter, the company posted net sales of US$2.89-billion, almost in line with analysts’ average estimate of US$2.9-billion, while adjusted profit of US$2.03 per share narrowly beat estimates of US$2.02 per share, according to data compiled by LSEG.
Dollar Tree (DLTR-Q) said on Thursday interim CEO Michael Creedon would take on the role permanently, tasking an insider to lead a turnaround of the dollar-store chain facing weak demand and intense competition.
Mr. Creedon, who worked at auto parts retailer Advance Auto Parts (AAP-N) for nearly a decade before joining Dollar Tree in 2022, was named interim CEO last month.
His appointment came after industry veteran Rick Dreiling decided to step down after a two-year stint due to health concerns.
Dollar Tree’s shares were higher in volatile trading on Thursday. They have lost a little over half of their value so far this year, as of the last close.
The Chesapeake, Virginia-headquartered company launched a turnaround effort this year that involved shutting 970 Family Dollar stores and exploring options, including a possible sale for the banner.
Dollar Tree also named former travel center chain Pilot Company’s executive Jason Nordin as president of the Family Dollar banner to lead the review.
Earlier this month, Dollar Tree beat third-quarter results, and said Chief Financial Officer Jeff Davis will step down after roughly two years on the job.
Dollar stores have struggled as Walmart (WMT-N) and other big-box retailers, as well as online sellers such as PDD Holding’s Temu, offer steep discounts to appeal to consumers seeking the best deals to stretch their budgets.
CarMax (KMX-N) on Thursday reported its first quarterly sales increase in more than two years, in an early sign that the used car market was rebounding from months of slump, sending the retailer’s shares up.
The company also beat analysts’ expectations for third-quarter revenue and profit.
Used car retailers have grappled with sluggish sales in recent quarters as consumers opted for better deals on new vehicles equipped with improved features.
Their profit margin took a hit as they offered discounts to offload inventory bought at inflated prices during the pandemic’s supply crunch.
CarMax in June had also flagged inflationary pressures hitting consumers during the year, which impacted vehicle affordability.
Lower prices, however, have helped win back some consumers.
Richmond, Virginia-based CarMax reported profit of 81 US cents per share for the quarter through Nov. 30, compared with average analyst expectation of 61 US cents per share, according to data compiled by LSEG.
Its revenue increased 1.2 per cent to US$6.22-billion, also beating expectations of US$6.04-billion, as retail and wholesale vehicle sales rose in the quarter.
On the decline
Micron Technology (MU-Q) shares slumped on Thursday, as a bleak forecast indicating sluggish demand for personal computers and smartphones overshadowed a lift from robust growth in sales of AI-related chips.
The market for dynamic random-access memory (DRAM) chips used in personal computers and smartphones has remained under pressure since the end of the pandemic amid a lingering supply glut and sluggish consumer demand.
Micron’s flash memory chip revenue in fiscal 2025 is expected to be significantly weaker, as sales of such chips are more exposed to PC and mobile phone shipments, Morningstar analyst William Kerwin said.
The post-pandemic growth in demand for traditional PCs did not match expectations and AI-enabled computers are yet to gain mass popularity.
Adding to the industry’s woes, the expected transition to Windows 11 following Microsoft’s decision to end support for Windows 10 has been more gradual than predicted.
Meanwhile, revenue from the company’s high-bandwidth memory chips, a type of DRAM chip used to power advanced AI systems, more than doubled sequentially.
“Micron’s HBM story remains intact as the company has positioned itself to capitalize on market expansion opportunities from data center investments in 2025,” Piper Sandler analysts said.
The Boise, Idaho-based company is only one of the three HBM chip providers alongside South Korea’s SK Hynix and Samsung.
Lennar Corp. (LEN-N) missed Wall Street estimates for fourth-quarter profit and revenue on Wednesday, as potential buyers remained reluctant to buy homes due to volatile mortgage rates, sending its shares down..
The second-largest U.S. homebuilder by sales posted adjusted earnings of US$4.06 per share for the quarter, below analysts’ estimates of US$4.16 per share, according to data compiled by LSEG.
The U.S. housing market has struggled to rebound after being knocked down by a resurgence in mortgage rates in the spring.
The 30-year fixed mortgage rate tracks the benchmark 10-year Treasury note, whose yield jumped to a four-month high in the aftermath of Republican Trump’s victory in the U.S. presidential race.
As per a Reuters poll of property experts, purchasing affordability for first-time U.S. homebuyers is expected to worsen over the coming year on tight supply and fewer-than-expected Federal Reserve interest rate cuts, even as the increase in average home prices is slowing down.
“Even while demand remained strong and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates,” Lennar’s co-CEO Stuart Miller said.
Lennar’s average sales price of US$430,000 for the quarter fell from US$441,000 a year earlier, owing to adjustments in prices caused by an increased use of incentives and a changing product mix.
The company expects to deliver 17,000 to 17,500 homes in the first quarter of 2025. Its deliveries fell 7 per cent to 22,206 homes in the fourth quarter ended November 30.
Lennar reported home sales gross margins of 22.1 per cent in the quarter compared with 24.2 per cent in the previous year.
Its fourth-quarter revenue fell to US$9.95-billion, below analysts’ estimate of US$10.08-billion.
Lamb Weston (LW-N) on Thursday named insider Michael Smith to replace its CEO following pressure from activist investor Jana Partners to revamp its top management or sell itself.
Its shares tumbled after the frozen potato snacks maker trimmed its annual profit and sales forecasts.
Mr. Smith, currently the operating chief, will take over from Thomas Werner on Jan. 3, the company said. Mr. Smith, who joined Lamb Weston in 2007, became the COO in May 2023.
”(The results) and decision to swap its CEO for another long-standing Lamb Weston executive complicit in its widespread operational and strategic debacles is just the latest stick in the eye,” Jana Partners said in a statement.
The activist investor, which revealed a roughly 5-per-cent stake two months ago, on Thursday also reiterated its call for a significant board change or sale. In a letter to Lamb Weston’s board this week, Jana said the company’s management had wasted a chance to sustain and grow shareholder value.
Lamb Weston, which was spun off from packaged foods maker Conagra Brands (CAG-N) in 2016, has a market value of about US$11-billion.
Grape Nuts cereal parent Post Holdings (POST-N) was working with investment bankers toward a potential buyout of Lamb Weston, Reuters reported last week.
With files from staff and wires