A survey of North American equities heading in both directions
On the rise
Montreal-based engineering giant AtkinsRéalis Group Inc. (ATRL-T) was higher by 0.1 per cent after saying it was divesting its 6.76-per-cent stake in Toronto’s 407 ETR toll road for nearly $2.8-billion.
Spanish construction giant Ferrovial will buy most of that stake – 5.06 per cent – for $2.1-billion and Canada Pension Plan Investment Board will acquire AtkinsRéalis’ remaining stake for $700-million.
In a parallel deal, PSP Investments will acquire 7.51 per cent of the 108-kilometre toll road, which runs from Burlington to Pickering, from CPP for an up-front payment of nearly $2.4-billion plus an undisclosed deferred payment to be made up to 18 months after the deal closes.
AtkinsRéalis first put its stake in the 407 up for sale in June, 2024. At the time, the stake was estimated to be worth $1.7-billion.
The announcement came alongside the release of its fourth-quarter 2024 results, which National Bank analyst Maxim Sytchev called “not a great print.”
“Consolidated revenue for the quarter came in at $2.588-billion, above our estimate at $2.411-billion and 7 per cent above Street at $2.410-billion),” he said. “Consolidated EBITDA sat at $203.6-million, 22 per cent lower than the Street at $261-million and our estimate at $263-million, due to more pronounced (than expected) losses in LSTK on commissioning costs for Trillium and additional provisions taken on delays for Eglinton LRT (Engineering and Nuclear were in line). Consolidated adjusted EPS came in $0.56 vs. Street at $0.78 and NBF at $0.81 and core EPS was also lower at $0.26.”
“Thankfully, 407 selling price is higher than expected. The 407 sale at $2.79-billion vs. expectations of just under $2.0-billion creates a positive NAV delta of almost $5.00/sh; the print itself with a bigger LSTK loss and OCF guidance of more than $300-million for 2025E is not exactly impressive, even though we need to understand how much of the nuclear prepayment dynamic skewed FCF in 2024 at the expense of 2025E. Because ATRL shares have, however, came off the boil as nuclear sentiment cooled (hence, shares down 15 percent year-to-date (after a massive 2024) vs. the TSX at down 1 per cent, we hope the 407 news outweighs the print. Without the former, the stock would have been down. We also suspect that speculation around future M&A will commence in earnest as ATRL already showed its hand with the David Evans acquisition. We rate ATRL shares Outperform with an $87.00 price target.”
- With files from Jameson Berkow
Algoma Steel Group Inc. (ASTL-T) increased 7.1 per cent after it reported a net loss of $66.5-million in its third and final quarter last year, compared with a loss of $84.8 million a year earlier.
Algoma Steel CEO hopes for federal boost amid tariff pressures
The Sault Ste. Marie, Ont. company changed the end of its fiscal year from March 31 to December 31, resulting in a nine-month fiscal year in 2024.
Algoma says revenues for the quarter were $590.3-million, rising from $615.4-million a year earlier.
Net loss per diluted share was 61 cents, down from net loss of 78 cents.
CEO Michael Garcia says the tariffs enacted Wednesday by U.S. President Donald Trump on aluminum and steel add further uncertainty to the market, but the company is confident that governments will step in to support the industry.
Mr. Garcia said the company believes “rational dialogue” will prevail between Canada and the U.S. to restore normal steel trade.
Shares of Intel (INTC-Q) surged 14.6 per cent as Wall Street cheered the decision to name former board member Lip-Bu Tan as CEO, who left in August over differences about the chipmaker’s direction, after several years of market underperformance.
Mr. Tan will be tasked with reviving the company’s fortunes after it missed out on the artificial intelligence-driven semiconductor boom while plowing billions of dollars into building out its chip-making business. Intel has posted several quarters of market share losses in data centers and PCs, as well as billion-dollar losses in its manufacturing business, and over the past five years, the stock has lost about 60 per cent of its value, a period of time when the Nasdaq Composite Index and S&P 500 have both more than doubled.
“Tan in as CEO at Intel was as good as stakeholders could have hoped for,” said TD Cowen analysts, noting that he has “deep relationships” across the chip ecosystem that could draw customers to the company’s contract manufacturing business.
Mr. Tan will take the helm next week — three months after Intel ousted CEO Pat Gelsinger.
Mr. Tan had been brought into the board two years earlier to help turn the company around, but left due to disagreements over the size of the company’s workforce and its culture. Skepticism about Intel’s future has deepened in recent months amid reports that rivals, including Broadcom, were evaluating the chip design and marketing business, while TSMC has separately studied controlling some or all of its plants.
Analysts expect Mr. Tan to follow Mr. Gelsinger in keeping the chip design and manufacturing operations together — a plan that Tan hinted at in a letter to employees by vowing to make Intel a top foundry, an industry term for a contract chip manufacturer. Some analysts have said the foundry business may find it difficult to draw orders from chip designers wary of entrusting production to a rival.
Intel’s market value has remained stuck below US$100-billion for the first time in three decades after shares slumped 60 per cent last year and its Gaudi AI chips have also missed sales targets.
More analysts recommend investors “sell” the stock than “buy” it, with most having a “hold” rating, LSEG data shows.
Dollar General (DG-N) forecast annual sales and profit targets below estimates, joining a growing list of retailers that have signalled a grim year as still-high inflation and economic uncertainty dent consumer spending.
Retailers including Walmart (WMT-N), Target (TGT-N), Home Depot (HD-N) and Best Buy (BBY-N) have raised caution about weak consumer spending in 2025 due to tariff uncertainty, as well as potential price hikes the levies would bring about.
Shares of Dollar General were, however, up 6.8 per cent as the discount retailer beat estimates for holiday-quarter sales and profit. The stock has slumped nearly 70 per cent over the last two years.
The company benefitted from improving its private-label brands selling everyday essentials, and remodelling its stores as part of a turnaround plan laid out by CEO Todd Vasos late in 2023.
For the holiday quarter, its comparable sales rose 1.2 per cent, ahead of estimates of a 0.96-per-cent rise, according to data compiled by LSEG.
Sales in the consumables category, which makes up about 80 per cent of Dollar General’s revenue, grew 5.3 per cent in the quarter ended January 1, helping the company report a profit of US$1.68 per share, topping estimates of US$1.50.
The company expects annual same-store sales growth between 1.2 per cent and 2.2 per cent, compared with analysts’ average estimate of a 1.82-per-cent rise.
It also forecast fiscal 2025 profit per share of about US$5.10 to US$5.80, below analysts’ average estimate of US$5.85.
On the decline
Canadian Imperial Bank of Commerce (CM-T) was lower by 1.1 per cent after announcing CEO Victor Dodig will retire at the end of October and hand the top job to Harry Culham, head of the bank’s capital-markets business.
Mr. Dodig has been chief executive officer at CIBC for 11 years. He rebuilt the bank’s balance sheet, did the largest acquisition in CIBC’s history by acquiring a Chicago-based lender for $4.9-billion and expanded the domestic retail platform. His departure was widely expected and will take place after a year when CIBC’s stock posted the best performance among the Big Six banks.
“This felt like the right time, with the right leadership team and the right captain ready to take over,” Mr. Dodig said in an interview.
“The bank is on a trajectory to do much more.”
Mr. Dodig turns 60 this year, which he said was a factor in his decision to step down. He started at CIBC in 1985 as a teller, while attending the University of Toronto, then earned an MBA from Harvard University and worked at McKinsey, Merrill Lynch and UBS before rejoining the Toronto-based bank in 2007.
“Victor’s tenure as president and CEO has been marked by a relentless focus on the client and an unwavering commitment to transforming CIBC,” Kate Stevenson, chair of the CIBC board, said in a press release.
Mr. Culham will become chief operating officer April 1, then succeed Mr. Dodig as CEO on Oct. 31, the bank’s fiscal year-end. Mr. Dodig will remain at CIBC as senior adviser to the board and new CEO until the end of April, 2026.
Mr. Culham emerged as the winner of a three-horse race that played out smoothly and publicly over the past year, a contrast to previous CIBC succession battles that led to the losing candidate departing abruptly. The other CEO candidates, head of Canadian retail banking Hratch Panossian and Shawn Beber, who runs CIBC Bank USA, are expected to remain in their roles.
- Andrew Willis
Empire Co. Ltd. (EMP-A-T) slid 4.5 per cent after reporting it earned a third-quarter profit of $146.1-million as its sales rose during the period.
Empire’s U.S. product sales dropping during trade war, CEO says
The parent company of grocery retailer Sobeys said it earned 62 cents per diluted share in its latest quarter, which was the same compared with its third quarter last year. It also matched analysts’ consensus estimate.
Revenue for the quarter totalled $7.73-billion, up from $7.49-billion a year earlier and exceeding the Street’s expectation of $7.66-billion.
The increase came as same-store sales rose 2.5 per cent.
Same-store sales growth, excluding fuel sales, amounted to 2.6 per cent.
Alimentation Couche-Tard (ATD-T) declined over 2 per cent after it reaffirmed Thursday that it is determined to acquire Seven & i Holdings, although the operator of Japan’s top convenience store chain has rejected its offer.
“We are continuing to pursue a friendly, mutually agreeable transaction,” the chairman and founder of Alimentation Couche-Tard, Alain Bouchard, told reporters in Tokyo.
Couche-Tard takes the fight for 7-Eleven to Japan
Mr. Bouchard stressed that his company was pursuing a “friendly” transaction, not a hostile takeover. He reiterated his promise to retain local management, saying the merger would be good for 7-Eleven’s business.
The chain has more than 20,000 stores nationwide and more than 80,000 outlets around the world, serving an estimated 63 million customers a day, according to Tokyo-based Seven & i Holdings Co.
In rejecting the Canadian company’s offer, Seven & i Holdings said it intends to boost its own corporate value. It also has raised antitrust concerns that it says will come up in the U.S.
Seven & i appointed a new chief executive this month and announced a share buyback and said it will sell its supermarket subsidiary to U.S. private equity firm Bain Capital, to help boost its value and fend off the acquisition.
Last year, Couche-Tard, which operates Circle K stores, proposed acquiring all of Seven & i Holdings shares for $14.86 per share in cash. Media reports now say the offer is for $18.19 per share, or about 7 trillion yen ($47 billion).
Montreal-based travel company Transat A.T. Inc. (TRZ-T) lost over 8 per cent after it reported a first-quarter net loss of $122.5-million, compared with a loss of $61-million in the same quarter last year.
The company behind Air Transat says the loss amounted to $3.10 per diluted share for the quarter ended Jan. 31, compared with a loss of $1.58 per diluted share a year earlier.
On an adjusted basis, Transat says it lost $1.90 per share in its latest quarter compared with an adjusted loss of $1.97 per share in the same quarter last year.
Revenue for the quarter totalled $829.5-million, up from $785.5-million a year ago.
The increase came as traffic expressed in revenue-passenger-miles rose 1.0 per cent compared with 2024
Transat’s capacity was up 0.5 per cent compared with a year earlier.
Adobe (ADBE-Q) forecast second-quarter revenue in line with Wall Street expectations on Wednesday, as it grapples with slower monetization of its artificial intelligence offerings while facing tough competition from startups.
Shares of the company fell 13.9 per cent in Thursday trading.
The company expects second-quarter revenue to be between US$5.77-billion and US$5.82-billion, in line with analysts’ expectations, according to data compiled by LSEG.
Adobe reaffirmed its annual revenue forecast and its CEO said the company is “well positioned to capitalize on the acceleration of the creative economy driven by AI.”
Analysts and investors are watching for when Adobe will be able to ramp the monetization of its generative AI products, as it invests heavily in distinguishing itself from rivals by infusing sharper AI editing tools into its vast portfolio.
“I think guidance is rough and I think people are questioning, is the AI monetization quick enough?” said Parker Snook, senior research analyst at M Science.
In an attempt to break ahead of an increasingly competitive market, Adobe has been aggressively integrating AI into its software to boost the appeal of products such as Photoshop, which is used by professionals across a variety of industries.
Annual recurring revenue for Adobe’s AI and add-on offerings was US$125-million at the end of quarter. Adobe expects to double this ARR figure in the next three quarters as it exits fiscal 2025, its CFO Dan Durn told Reuters in an interview.
“While investors are still concerned about the transition to AI, as Adobe continues to deliver new products we expect those concerns to be replaced by excitement over those products,” said DA Davidson analyst Gil Luria.
On an adjusted basis, the company earned US$5.08 per share, compared with estimates of US$4.97 per share.
American Eagle Outfitters (AEO-N) forecast annual revenue below expectations late Wednesday, becoming the latest U.S. apparel maker to signal a demand slowdown for clothing and accessories as well as a hit to margins from President Donald Trump’s tariffs on China.
Shares of the Aerie activewear brand maker fell 4.2 per cent. Apparel makers and retailers such as Walmart (WMT-N) and Target (TGT-N) have struck cautious expectations for the year as an uncertain economy, burdened by Trump’s seesaw tariff announcements, has turned shoppers discerning on buying non-essential items.
“Entering 2025, the first quarter is off to a slower start than expected, reflecting less robust demand and colder weather,” said CEO Jay Schottenstein. In early March, Abercrombie & Fitch also flagged a weaker start to 2025.
American Eagle expects fiscal 2025 revenue to decline in the low-single digit percentage range, while analysts were expecting a 2.97-per-cent rise to US$5.49-billion, according to data compiled by LSEG.
The company sees annual operating income to be in the range of US$360-million to US$3750million, compared to US$427-million in 2024. CFO Michael Mathias noted on the post-earnings call that tariffs would have an adverse impact of US$5-million to US$10-million.
In March, Mr. Trump increased tariffs on all Chinese imports to 20 per cent from the previous 10-per-cent levy, further fueling a trade war expected to raise prices of products in the United States.
“We’re also actively working to further diversify our supply chain to mitigate tariffs,” Mathias said. He added the company is working to make imports from China in the single-digit percentage range towards the back half of this year, from the current high-teens percentage.
Its quarterly revenue fell 4.4 per cent to US$1.61-billion, compared to estimates of US$1.60-billion. Profit per share of 54 US cents came ahead of expectations of 50 US cents.
“AEO represents yet another company posting a solid holiday quarter but opting to guide cautiously in light of the uncertainty in the market, echoing the general theme seen across retail earnings this cycle,” BMO Capital Markets analyst Simeon Siegel said.
With files from staff and wires