A survey of North American equities heading in both directions
On the rise
Shares of telecom company BCE Inc. (BCE-T) were higher by 5.4 per cent after it cut its dividend by more than half, marking a long-anticipated departure from its extended history of steady payout growth.
BCE is reducing its annualized dividend to $1.75, or $0.4375 quarterly per common share, from a $3.99 annualized common share dividend.
The company has been distributing to shareholders more in dividends than it has been earning in free cash flow, while also balancing the weight of more than $30-billion in long-term debt.
Until the dividend cut, the widely held shares were yielding 13 per cent, which was broadly seen as unsustainable for the company.
“There are a number of significant changes in our economic and operating environments that have occurred since the Fall of 2024 that we need to address. We have made the appropriate decision to adjust our annualized dividend to $1.75 per common share to strengthen our balance sheet while maintaining flexibility in the context of economic uncertainty,” said Mirko Bibic, president and chief executive officer of BCE and Bell Canada in a release Thursday morning.
BCE’s first-quarter results reflect intense price competition and sustained regulatory uncertainty, he added.
“With the current backdrop of macroeconomic and geopolitical instability, we need to stay more focused than ever on our core business and on winning customers over to Bell.”
Part of the company’s debt is related to the company’s proposed acquisition of U.S.-based Ziply Fibre, which would see BCE pay $5-billion for the company and hundreds of millions in capital expenditures building out Ziply’s network.
BCE also announced Thursday that it has struck a partnership on Ziply with PSP Investments that will see the Ottawa-based pension plan invest US$1.5-billion to expand the fiber network from 1.3 million to up to 8 million potential customers.
BCE plans to sell a 51-per-cent-stake in the business Ziply builds with new customers to PSP Investments, a public sector pension fund with $265-billion in assets.
In a research note released before the bell, TD Cowen analyst Vince Valentini said: “Consolidated EBITDA/EPS/FCF looked good (and no change in 2025 guidance), but investors will likely not like the composition. Media drove the EBITDA beat (telecom segment missed), and many key subscriber metrics were very weak, including negative wireless sub adds (including negative postpaid adds) and a healthy miss on broadband sub adds. There were also subscriber write-downs, inorganic contributions, working capital swings, and lower cash taxes, which we will need to dig into more later. Mobile ARPU [average revenue per user] was not as bad as feared, so wireless service revenue also beat very slightly, albeit down 0.8 per cent year-over-year is not good in our view, and it should be the worst in the group this quarter (Rogers was up 1.5 per cent).
“We commend management for setting the foundation for future growth and balance sheet strength, but the near-term reaction to this set of news could be weak in our view.”
- Irene Galea and Andrew Willis
Canadian Tire Corp. Ltd. (CTC.A-T) jumped 4.6 per cent after it reported its first-quarter profit fell compared with a year ago as it was hit by restructuring costs but exceeded the Street’s forecast.
The retailer says its net income attributable to shareholders from continuing operations amounted to $27.3-million or 49 cents per diluted share, down from $59.9-million or $1.08 per diluted share a year ago.
The company says its net income attributable to shareholders from discontinued operations totalled $9.9-million or 18 cents per diluted share in its latest quarter compared with $16.9-million or 30 cents per diluted share in the same quarter last year.
On a normalized basis, Canadian Tire says it earned $2.00 per diluted share from continuing operations, up from $1.08 per diluted share a year earlier and well above the Street’s expectation of $1.22, according to LSEG data.
Revenue for the quarter totalled $3.46-billion, up from $3.33-billion in the same period last year.
Canadian Tire also announced a partnership with WestJet that will bring together their loyalty reward programs. Starting early next year, the company says the partnership will allow Triangle Rewards’ and WestJet Rewards’ members the ability to link their loyalty accounts and earn stacked rewards.
RBC’s Irene Nattel said: “Bottom line: Positive and supportive of constructive view. Q1 results supportive of our view that valuation continues to underestimate resiliency of CTC business model. Q1 a seasonally weak quarter but results far better than RBC and Street forecasts as tiny green shoots of sequentially improving trends from Q4 intensified in Q1 as intense weather acted as catalyst for Canadians to head to the destination retailer for key categories.”
Canadian Natural Resources (CNQ-T) reported a first-quarter profit on Thursday that beat analysts’ estimates, helped by higher oil and natural gas production, sending the company’s shares up 5 per cent.
Oil producers in Canada are benefiting from the start up of the Trans Mountain pipeline expansion project, which has nearly tripled the flow of oil to the country’s Pacific Coast from landlocked Alberta, raised the price of Canadian crude and opened up market access to refineries in Asia and the U.S. West Coast.
Canadian Natural Resources’ quarterly output also got a boost from the recently acquired Athabasca oil sands and Duvernay shale formation assets, which the company bought from Chevron for $6.5-billion.
Canadian Natural Resources, the country’s largest oil and gas producer, said its total output rose to 1.58 million barrels of oil equivalent per day (mboepd) during the first quarter from 1.33 mboepd.
The company produced 1.17 million barrels per day (bpd) of liquids and 2.45 billion cubic feet (bcf) per day of natural gas during the quarter.
Total realized price for exploration and production liquids rose 14 per cent to $79.85 per barrel, while realized prices for natural gas output climbed nearly 23 per cent to $3.13 per thousand cubic feet.
Canadian Natural Resources said it would lower its annual capital budget by $100-million to $6.05-billion, adding that it would have no impact on the company’s planned operating activities or targeted production levels for 2025.
The company aims to produce between 1.51 million and 1.55 million barrels of oil equivalent per day (boepd) in 2025, the upper limit of which is in line with analysts’ expectations, according to data compiled by LSEG.
On an adjusted basis, Canadian Natural Resources earned $1.16 per share in the quarter, compared with analysts’ average expectation of $1.05.
In a note, RBC’s Head of Global Energy Research Greg Pardy said: “CNQ’s solid first-quarter results reinforce our confidence in the company’s long-term outlook. The company reported 9 per cent higher AFFO/shr. of $2.15, 2 per cent higher (record) production of 1.58 million boe/d, and 9-per-cent lower capital spending vis-à-vis Street consensus. The company also announced a $100 million reduction to its capital program that will have no impact on its planned operating activities or equivalent production guidance of 1,510-1,555 mboe/d. CNQ will update its production guidance following the close of its AOSP swap transaction sometime in the first-half of 2025.
“CNQ is our favorite senior producer and on our Global Energy Best Ideas list.”
Cenovus Energy (CVE-T) on Thursday posted a fall in first-quarter profit but managed to beat Wall Street estimates on the back of higher output and improved refining margins.
The Calgary-based company’s shares were up 9 per cent following the results.
Energy producers in Canada have been benefiting from the completion of the Trans Mountain pipeline expansion project, which offers the only export route to international markets bypassing the U.S.
The pipeline has raised its capacity to 890,000 barrels per day.
Cenovus’ total upstream production was 818,900 barrels of oil equivalent per day (boepd) in the first quarter, up from 800,900 boepd a year earlier.
Its total quarterly downstream throughput was 665,400 barrels (bbl) per day, compared with 655,200 bbl per day a year ago.
Refinery utilization in the Canadian Refining segment rose to 104 per cent from 94 per cent a year ago, while it rose to 90 per cent in the U.S. Refining segment from 87 per cent.
CEOs of Canadian oil and gas producers, including Cenovus’ Jon McKenzie, had said earlier in April they are seeking to avoid making abrupt decisions about spending or production, with oil prices hitting four-year lows and recession fears growing.
Cenovus’ first-quarter net income fell to $859-million from $1.18-billion a year earlier, as crude prices declined on uncertainty surrounding the U.S. economy, tariff policies and fears of oversupply.
However, the company’s quarterly profit per share of 47 cents surpassed analysts’ average estimate of 37 cents per share, according to data compiled by LSEG.
RBC’s Greg Pardy said: “Cenovus Energy announced solid first-quarter results punctuated by 12-per-cent higher AFFO/shr., 1 per cent higher total production, and 3-per-cent lower capital spending vis-à-vis Street consensus. Alongside first-quarter results, the company announced an 11-per-cent increase to its base dividend to $0.80 per share (4.9-per-cent yield) on an annualized basis (broadly in-line with our outlook).”
Restaurant Brands (QSR-T) closed 0.1 per cent higher after missing first-quarter revenue and profit estimates on Thursday, hurt by sluggish demand at its restaurant chains such as Burger King and Tim Hortons against the backdrop of tariff-related uncertainty.
The restaurant industry has been battling ongoing sales declines as budget-conscious Americans stick to home-cooked meals, prioritizing spending on essentials over dining out.
The U.S. economy shrank for the first time in three years in the first quarter, signaling consumers are expecting product prices to shoot up due to the escalating global trade tensions.
The Trump administration’s shifting tariff policies have forced businesses to raise prices in an effort to protect profit margins from rising input costs and supply chain disruptions.
Fast-food chain operators such as McDonald’s, Domino’s , Chipotle and Starbucks took a hit to sales and flagged weak consumer demand.
Restaurant Brands’ increased advertising and promotional efforts such as $5 value meals didn’t connect well with middle-to-lower-income groups.
Comparable sales at the company’s Tim Hortons segment, its biggest revenue generator, dipped 0.1 per cent in the quarter, while at Burger King it fell 1.3 per cent.
“Surprised by the Tim Hortons miss in the context of peers that cited strength in Canada including McDonald’s, Starbucks, Wendy’s & Yum!, while the brand was a theoretical beneficiary of the ‘Buy Canadian movement’,” Andrew Charles, analyst with TD Cowen Securities said.
Restaurant Brands said rising prices of commodities such as coffee pushed up its supply chain costs.
The company reported quarterly revenue of US$2.11-billion, compared with analysts’ average expectation of US$2.13-billion, according to data compiled by LSEG.
On an adjusted basis, Restaurant Brands earned 75 US cents per share, missing estimates of 78 US cents.
Citi analyst Jon Tower said: “The expectation that TH Canada would benefit from consumers pivoting toward Canadian brands in 1Q did not appear to bear out in SSS (up 0.1 per cent vs. Street up 1.4 per cent), which contributed to adjusted EBITDA missing Street expectations ($642-million vs. $664-million). BK INTL comps generally met the Street mark (up 2.7 per cent vs. Street up 2.9 per cent) though global net unit growth came up slightly shy of expectations (up 3.0 per cent vs. 3.1 per cent) and QSR tempered its expectations for unit growth over the next several years (now anticipating not hitting 5-per-cent NUG until near the end of its algo period, or ’28) while maintaining average annual SSS/adjusted EBIT growth guidance. The unit growth cut was somewhat anticipated, though along with softer TH CAN comps and broader investor concerns around the health of the global consumer, we don’t expect shares to react favorably to the news in the near term.”
WSP Global Inc. (WSP-T) gained 3.4 per cent after chief executive Alexandre L’Heureux said it remains largely insulated from tariff fallout and cost-cutting by the U.S. government, but acquisitions at the engineering giant may have to take a back seat amid broader economic uncertainty.
“The worst thing that can happen for an M&A environment to be prosperous is to have instability and a lack of visibility into the future,” he told analysts on a conference call Thursday.
“A lot of players are on the sidelines and are waiting for good conditions.”
As it watched and waited, the Montreal-based company racked up a 14-per-cent profit increase year-over-year.
It grew its backlog 17 per cent to a record $16.60-billion, despite the U.S. administration’s aversion to spending on big projects hatched in recent years.
The firm also drew on its October purchase of Power Engineers — an American engineering and environmental consulting company with 4,000 employees — to help reach nearly six per cent organic revenue growth in the United States, which accounts for 40 per cent of WSP’s net sales.
On Thursday, WSP reported net earnings attributable to shareholders of $144.1-million in the three months ended March 29, up from $126.8-million in the same period a year earlier.
Revenue climbed 22 per cent to $4.39-billion in the first quarter from $3.59-billion the year before.
On an adjusted basis, net earnings increased to $1.76 per share from $1.55 per share, beating analysts’ expectations of $1.71 per share, according to financial markets firm LSEG Data & Analytics.
On the decline
Shopify (SHOP-T) forecast second-quarter profit below Wall Street estimates on Thursday, sparking fears that the e-commerce company could take a hit from global trade uncertainty that’s hurting businesses of retailers on its platform.
Shares of the Ottawa-based company closed down 0.3 per cent after Shopify also missed estimates for first-quarter profit as well as targets for revenue from sale of platform subscriptions and other applications.
Shopify’s dour profit outlook comes at a tough time for retailers - as well as the broader economy - as trade tensions brought on by U.S. President Donald Trump’s sweeping tariff plans cast a long shadow on businesses.
E-commerce industry leader Amazon has also forecast second-quarter operating income below estimates.
Hefty duties planned on U.S. imports, especially on goods from China, stand to crimp business operations, particularly for small- and medium-sized businesses - which make up a large chunk of Shopify’s clients.
“There has been some concern over the impact of tariffs on merchants and whether some merchants are suspending or giving up on their business because of tariffs ... That could have an impact on Shopify and it’s possible that that’s what we’re seeing,” D.A. Davidson analyst Gil Luria said.
The company forecast second-quarter gross profit dollars to grow at a high-teens percentage range, while analysts were expecting a 20.2-per-cent rise, according to data compiled by LSEG.
It, however, projected better-than-expected revenue, in a sign that its investments in platform upgrades and roll-out of AI features were paying off.
The company sees revenue growth in the mid-twenties percentage range, compared with analysts’ average estimate of 22.4-per-cent growth.
For the first quarter ended March 31, Shopify reported revenue of US$2.36-billion, beating estimates of US$2.33-billion.
Manulife Financial (MFC-T) was down 0.1 per cent after it posted a 3-per-cent jump in first-quarter profit on Wednesday, helped by the strong performance of its insurance business in Asia and overall growth in its global wealth and asset management business.
Manulife has been expanding its investment advisory and retirement planning services to tap into the rising demand for long-term financial management.
The firm’s push in Asian markets to capture the financial needs of a growing, under-insured middle class has helped its earnings in recent quarters.
Core earnings from Asia rose 7 per cent to $492-million, while global wealth and asset management reported a 24-per-cent jump to $454-million in the quarter.
However, its U.S. unit saw a 25-per-cent drop in core earnings to $251-million in the quarter due partly to tariff-induced uncertainty in financial markets and more money set aside to cover potential loan losses.
The company’s core earnings jumped to $1.77-billion, or 99 cents per share, in the three months ended March 31. Analysts had expected a profit of 99 cents per share, according to data compiled by LSEG.
Nutrien (NTR-T) declined 2.8 per cent after it fell short of Wall Street expectations for first-quarter profit on Wednesday, as the top potash producer was impacted by lower prices and higher energy costs.
Trade tensions between the United States and China following Mr. Trump’s tariffs have led to volatility in crop prices over the past few months, prompting farmers to reign in costs, which in turn has hit demand for fertilizers.
Its quarterly net selling price for potash in North America fell 21.6 per cent from a year earlier to US$243 per tonne, while adjusted core profit for the segment was down about 16 per cent at US$446-million.
Higher energy costs in its nitrogen segment further pressured earnings in the quarter, which raised its cost of goods sold by about 10 per cent at US$663-million.
Adjusted core profit fell about 12 per cent to US$408-million.
Average natural gas prices have risen over the past few quarters and hit a two-year high on March 10, supported by strong demand from LNG export facilities and supply concerns in the run up to the summer season.
Nutrien’s quarterly earnings were also impacted by delayed field activity due to wet weather conditions in North America and strategic actions in South America.
The Saskatoon-based firm posted an adjusted profit of 11 US cents per share for the quarter ended March 31, compared with the analysts’ average estimate of 31 US cents per share, according to data compiled by LSEG.
Raymond James analyst Steve Hansen said: “Nutrien reported 1Q25 Adj. EBITDA of $852-million, a healthy miss versus both the Street and RJL estimates of $947-milion and $927-million, respectively, with the bulk of the downside (vs. our estimate) attributable to weaker-than-expected Retail (weather) and Phosphate (downtime, COGS) results. Despite this shortfall, management reiterated its upbeat 2025 guidance predicated on: 1) a strong expected NA planting season; 2) strengthening global NPK fundamentals; and 3) improved Nutrien operating rates. In short, we share this upbeat view, and encourage investors to add to NTR positions on any weakness.”
Brampton, Ont.-based MDA Space Ltd. (MDA-T) was lower by 1 per cent after it reported its first-quarter profit and revenue rose compared with a year ago.
The space technology firm says it earned $32.9-million or 26 cents per diluted share in the quarter ended March 31, up from a profit of $13.8-million or 11 cents per diluted share a year ago.
On an adjusted basis, MDA says it earned 29 cents per diluted share in its latest quarter, up from an adjusted profit of 15 cents per diluted share in the same quarter last year.
Revenue for the quarter totalled $351.0-million, up from $209.1-million a year earlier. The Street was projecting $325-million.
The increase in revenue came as company’s satellite systems business took in $222.0-million in the quarter compared with $87.0-million a year ago, while its robotics and space operations business earned $77.3-million in revenue, up from $70.6 million. MDA’s geointelligence business earned $51.7-million in revenue, up from $51.5-million.
The company’s backlog stood at $4.8 billion at the end of the quarter.
In a note, Desjardins Securities analyst Benoit Poirier said: “From a trading standpoint, we expect a very positive reaction given the beat and stronger-than-expected FCF (once again). MDA now holds a net cash position of $376-million,which signifies it can basically cover the entirety of the upcoming 3Q SatixFy acquisition outflow with the cash on its balance sheet (to remain debt-free after the deal closes). Moreover, we expect management to provide some comforting commentary on the Canadarm3 program following headlines of potential budget cuts by the White House late last week.”
Molson Coors (TAP-N) on Thursday lowered its forecasts for annual sales and profit, after missing first-quarter estimates, anticipating the impact of U.S. President Donald Trump’s tariffs on the demand for its Coors and Miller beer brands.
Shares of the company were down 4.5 per cent.
Consumers in the U.S., faced with a possible recession amid the already inflationary prices of goods due to tariffs, have been paring back on discretionary spending such as alcohol.
“Uncertainty around the effects of geopolitical events and global trade policy, including the impacts on economic growth, consumer confidence and expectations around inflation, and currencies, has pressured the beer industry and consumption trends,” CEO Gavin Hattersley said.
However, Molson Coors could face only minimal direct hits from tariffs, as the company said the majority of its beer for the U.S. market is produced locally in its Colorado breweries.
Analysts, meanwhile, view that Canada’s retaliatory tariff impact on American beer will be limited as the company produces beer for the Canadian market in its breweries in the country.
The company expects a low single-digit decline in annual net sales, compared with previous expectations of a low single-digit growth.
Molson Coors also sees a low single-digit increase in annual adjusted profit per share, compared with the prior view of a high single-digit increase.
The company’s net sales for the first quarter ended March 31 were US$2.30-billion, missing analysts’ estimates of US$2.41-billion, according to data compiled by LSEG.
Its adjusted quarterly earnings per share of 50 US cents was below the estimates of 83 US cents.
Arm (ARM-Q) shares sank on Thursday after the chip technology provider issued a weak revenue forecast and joined other semiconductor companies in warning about a hit from tariffs-driven economic uncertainty.
The move aligns Arm with companies such as Apple (AAPL-Q) and Advanced Micro Devices (AMD-Q), which have flagged additional costs due to the U.S.-China tariff war hurting tech supply chains.
Arm derives revenue from licensing fees for its chip designs and collects a royalty for each chip sold that uses its technology.
Its revenue faces a threat as smartphones, which use its designs, grapple with slower sales as prices rise due to tariffs.
Counterpoint Research said in April it expects the smartphone market to decline this year due to economic uncertainty from tariffs.
“Royalties will likely face tariff-driven end demand headwinds, offset somewhat by Arm’s strong pricing/royalty rate inflation,” Citigroup analysts said in a note.
To offset the demand fluctuations with smartphones, Arm has been trying to make inroads into artificial intelligence data centers.
Arm CEO Rene Haas told Reuters the below-expectations guidance is due to a large licensing deal that may not close during the fiscal first quarter.
“We remain engaged on the LT (long-term) story, but caution that the high consumer exposure leaves the company particularly vulnerable to the macro,” Barclays analysts said.
At least three brokerages cut their price targets on the stock, bringing the median to US$144.5, according to data compiled by LSEG.
ARM shares trade at 58.76 times the estimates of its earnings for the next 12 months, compared with Nvidia’s (NVDA-Q) 24.49 and AMD’s 20.96.
So far this year, ARM has gained nearly 1 per cent, compared with Nvidia and AMD’s loss of nearly 13 per cent and 17 per cent, respectively, in the same period.
With files from staff and wires