A survey of North American equities heading in both directions
On the rise
Shares of Loblaw Companies Ltd. (L-T) closed 2.5 per cent higher after exceeding analysts’ expectations for first-quarter revenue and profit on Wednesday, driven by robust demand at its pharmacy stores and discount banners, Maxi and No Frills, for everyday essentials.
Consumers in Canada have become more wary with their spending as U.S. President Donald Trump’s tariffs have increased worries about rising inflation that could further tighten household budgets.
Canada’s retail sales shrank faster than anticipated in January. The country’s central bank has forecast that consumer spending will drop and GDP will be hit as Canadian businesses and consumers deal with a wave of tariffs from the Trump administration.
This has pushed people to look for lower-priced items, boosting demand at Loblaw’s discount banners which offer everything from fruits to household items.
The Canadian supermarket chain also enjoyed strong demand for cosmetics and saw growth in pharmacy sales due to an extended cold and flu season, which helped offset an exit from certain low-margin electronic products.
Same-store sales at the company’s food retail segment rose 2.2 per cent in the first quarter, while comparable sales at its drug retail unit increased 3.8 per cent.
Loblaw still continues to see tight spending on discretionary items such as home appliances and furniture, which analysts have said would take long to recover.
The company’s revenue rose 4.1 per cent to $14.14-billion in the first quarter, compared with the average analyst estimate of $14.07-billion, according to data compiled by LSEG.
On an adjusted basis, Loblaw earned $1.88 per share, topping expectations of $1.87.
The company reaffirmed its annual adjusted net earnings per share forecast of high single-digit percentage growth.
“L reported another solid quarter, with adjusted EPS of $1.88 (vs our estimate and consensus of $1.86) and growth of 9.3 per cent year-over-year, right in line with its financial framework,” said Desjardins Securities analyst Chris Li. “Slightly softer adjusted EBITDA ($1,591-billion vs our $1,617-billion estimate) was offset by lower-than-expected depreciation and interest expense. The retail segment showcased solid SSSG in both food and drug and good cost control, partly offset by lower gross margin. There is no change to management’s expectation of high-single digit percentage EPS growth this year.”
Gildan Activewear Inc. (GIL-T) jumped 7.1 per cent after its earnings rose to US$84.7-million in its latest quarter.
The Montreal-based apparel maker says the first-quarter profit compared with net earnings of US$78.7-million a year earlier.
Reaction to Gildan's earnings on the Street: Wednesday's analyst upgrades and downgrades
Net sales for the quarter ended March 30 totalled US$711.7-million, up from US$695.8-million.
On an adjusted basis, Gildan says it earned US$89.8-million in the quarter, compared with US$99.1-million a year ago.
Those figures translated to adjusted earnings of 59 US cents per diluted share, flat compared with a year before.
Financial markets data firm Refinitiv said on average analysts had expected adjusted earnings of 57 US cents per diluted share.
Capital Power Corp. (CPX-T) gained 3.2 per cent even after saying its profit fell during the first quarter of 2025 as revenues and other income decreased.
The Edmonton-based electricity producer says its net income attributable to shareholders was $151-million during the quarter ended March 31, or $1.03 per diluted share.
That compared with a profit of $205-million or $1.57 per diluted share during the same period a year ago.
Revenues and other income for the quarter decreased to $988 million from $1.12-billion during the first quarter of 2024.
The company highlighted a $3-billion agreement it struck during the quarter to acquire two natural gas-fired power generation facilities located in the Pennsylvania-New Jersey-Maryland Interconnection market.
Chief executive Avik Dey says the deal “supports our thesis that natural gas-fired assets are critical to reliability, provide opportunity for growth and creation of shareholder value in various market conditions.”
RBC Dominion Securities analyst Maurice Choy said: “With the results being ahead of our estimates and consensus, we expect the company’s announcement to have a positive impact on the company’s share price.
“Stronger-than-expected Q1/25 results. Capital Power’s Q1/25 normalized EBITDA was $367 million, which compares to our estimate of $320 million and consensus of $314 million (11 estimates; range of $281-340 million). While most re-segmented line items were slightly ahead of our forecasts, Corporate EBITDA was notably better than expected, with the company highlighting insurance proceeds that it received during the quarter. Meanwhile, AFFO was $218 million ($1.57/share), which compares to our estimate of $167 million ($1.20/share) and the company-compiled consensus of $186 million or $1.34/share (range of $162-230 million), with the difference to our estimate largely due to the difference in EBITDA.”
Visa (V-N) beat Wall Street estimates for quarterly profit on Tuesday, as the world’s largest payment processor benefited from a steady rise in card payment volumes and the company unveiled a US$30-billion share repurchase plan.
Payments volume — a gauge of overall consumer and business spending on Visa’s network — jumped 8 per cent in the second quarter, while revenue rose 9 per cent to US$9.6-billion.
“While we are certainly not immune to macroeconomic impacts, our incredibly diverse business model has proven to be resilient in the face of a variety of environments, most recently in second-quarter, and we see this resilience playing out in our financial outlook,” CEO Ryan Mclnerney said in a call.
American Express (AXP-N), which generally caters to affluent customers, also beat estimates for profit earlier in the month. Mastercard (MA-N) is set to report its quarterly earnings later in the week.
Visa’s shares were up 1.2 per cent on the day. They have climbed more than 8 per cent so far this year, outperforming Mastercard’s 2.5-per-cent gain and American Express’ 10-per-cent decline.
Visa also strengthened its annual net revenue growth forecast to low double-digit from high single-digits to low double-digits expectation earlier. The Street was expecting a 10-per-cent growth, according to data compiled by LSEG.
The company posted an adjusted profit of US$5.4-billion, or US$2.76 per share, in the three months ended March 31. That compared with US$5.1-billion, or US$2.51 per share, a year earlier.
Analysts had expected an adjusted profit of US$2.68 per share.
Caterpillar (CAT-N) on Wednesday reported a lower-than-expected first-quarter profit on weak construction equipment demand and outlined two scenarios for its annual sales outlook, one of which included the potential impact of extensive tariffs.
The industrial giant gave investors two different scenarios for its annual forecast, in a sign of how difficult it was for companies to plan around Mr. Trump’s chaotic tariff policies.
Shares of Caterpillar closed up 0.5 per cent after the company forecast an improvement over its prior expectations under a scenario that excluded tariff impact.
Including tariffs, Caterpillar said it expects annual sales and revenue to be slightly down from 2024, but in line with its prior expectations.
The company said it expects an additional tariff-related cost headwind of between US$250-million and US$350-million in its second quarter.
Caterpillar had benefited from former President Joe Biden’s 2021 infrastructure law, a US$1 -rillion spending package that boosted demand for construction equipment.
But that momentum has started to slow as project starts ease and private sector investment shows some hesitancy amid higher interest rates.
High borrowing costs and persistent inflation have pressured dealers to realign their inventory levels to match demand, while weakness in China’s property sector has hindered infrastructure spend and hurt Caterpillar’s sales in the region.
Quarterly revenue in the Asia Pacific region fell 12 per cent to US$2.4-billion. The company does not provide a country-specific breakup for revenue.
While quarterly sales fell across all segments from a year ago, revenue from Caterpillar’s unit that serves oil, gas, and marine customers edged up on price hikes, making it the company’s largest segment.
Quarterly adjusted profit per share fell to US$4.25 compared with analysts’ average estimate of US$4.35, according to data compiled by LSEG.
On the decline
Montreal-based CGI Inc. (GIB.A-T) was down 1.6 per cent despite reporting its second-quarter profit rose compared with a year ago as its revenue also climbed higher.
The business and technology consulting firm says it earned $429.7-million or $1.89 per diluted share for the quarter ended March 31.
The result compared with a profit $426.9-million or $1.83 per diluted share in the same quarter last year.
Revenue for the quarter totalled $4.02-billion, up from $3.74-billion a year earlier.
On an adjusted basis, CGI says it earned $2.12 per diluted share in its latest quarter, up from an adjusted profit of $1.97 per diluted share a year earlier.
Bookings for the quarter totalled $4.48-billion, while the company’s backlog stood at $30.99-billion at the end of the quarter.
In a research note, Desjardins Securities analyst Jerome Dubreuil said: “CGI’s 2Q FY25 results were slightly above expectations, with a slight top-line beat and strong bookings despite the challenging environment. We expect a positive reaction in the stock today. However, we believe that more than usual, the market may focus on the outlook (vs on the quarter)—we will monitor the 9am call for any colour on the potential impact of the increased macroeconomic uncertainty. We no longer anticipate a 2H organic growth improvement, as we did in January, but believe this is already reflected in the share price.
“The outlook matters more. We believe a factor that has supported peers’ share price this earnings season is guidance. Investors understand there is risk to those forecasts (and seemed especially skeptical of Accenture’s guidance increase), but renewed guidance such as Capgemini’s likely helped investors put the recent uncertainty in context. We do not expect CGI to trend differently vs peers, but the lack of guidance may leave investors wondering about its outlook. We note that CGI announced an increase in the scope of its restructuring program.”
Starbucks (SBUX-Q) faces challenges in reviving its business, CEO Brian Niccol said on Tuesday, after the coffee giant posted disappointing global comparable sales and profit with inflation and economic uncertainty driving up costs and dampening U.S. demand.
Investors have placed their bets on Mr. Niccol’s turnaround strategy for the brand, whose sales have fallen for four straight quarters, by reducing production and service times and investing in stores to improve customer experience.
“Our financial results don’t yet reflect our progress, but we have real momentum with our ‘Back to Starbucks’ plan,” Mr. Niccol said in a statement.
Starbucks paused rolling out its Siren System store revamp program, launched under former CEO Howard Schultz, because it was capital heavy, said Mr. Niccol, who had helped revive Chipotle Mexican Grill as CEO of the burrito chain.
The company will focus on investing in improving front-end delivery instead of kitchen equipment, Mr. Niccol said on a post-earnings call. “The equipment doesn’t solve the customer experience that we need to provide.”
Mr. Niccol said Starbucks was improving service speed with the right staffing and deployment, and that its refreshed marketing was resonating with customers.
Starbucks’ shares fell 5.7 per cent on Wednesday. The stock, which had surged in the months following Mr. Niccol’s appointment as CEO, is down about 7 per cent so far this year.
North American same-store sales fell 1 per cent for the fiscal second quarter ended March 30, worse than the 0.24-per-cent drop estimated by analysts in an LSEG poll. The company said sales in Canada returned to growth in the quarter.
Total same-store sales declined 1 per cent in the second quarter, compared with analysts’ average estimate of a 0.26-per-cent fall. Comparable sales had declined 4 per cent in the preceding three-month period.
Super Micro Computer (SMCI-Q) shares tumbled over 11 per cent on Wednesday after the server maker slashed its revenue forecast, the latest blow to the former AI darling trying to regain investor confidence following late filings and short-seller attacks.
The company blamed the cut on delays in purchases from customers, fanning worries that big technology companies were reining in spending on AI infrastructure as the economic outlook worsens and the short-term returns remain uncertain.
While several Big Tech firms have reaffirmed their hefty AI spending plans in recent months, analysts say Microsoft and Amazon have slowed new data center leases as they become cautious about expanding capacity.
But several analysts including those at brokerage J.P. Morgan said Super Micro’s cut was unlikely to be representative of any industry-wide slowdown in demand or supply constraints.
This was “driven by specific customer decisions on platforms which shifted in relation to timing,” J.P. Morgan analysts said, while Rosenblatt Securities called them “isolated issues.”
Some analysts said the cut could deepen investor scrutiny of Super Micro’s forecasts, given it had predicted just last month that sales would be around US$40-billion in its next fiscal year, almost twice what analysts expect for the current one.
With its shares soaring more than triple in value in 2023, the company was one of the biggest winners of the generative AI boom until last year when it had to delay its annual report, lost its auditor and faced short-seller reports from the now-disbanded Hindenburg Research. Last year, its stock rose 7.2 per cent, widely underperforming the benchmark S&P 500 index
U.S.-listed shares of Stellantis (STLA-N) fell 3.2 per cent on Wednesday after it suspended its guidance for a moderate recovery this year, after a profit drop in 2024, due to the uncertain impact of Mr. Trump’s tariffs, and said it would review capital spending plans.
The move is “due to evolving tariff policies, as well as the difficulty (in) predicting possible impacts on market volumes and the competitive landscape,” the Franco-Italian-American automaker said in a statement.
Rivals General Motors, Volvo Cars and Mercedes-Benz have also withdrawn their financial guidance this week, citing the uncertainties caused by U.S. trade policies.
Jeep and Chrysler maker Stellantis in 2024 imported over 40 per cent of the 1.2 million vehicles it sold in the United States, mostly from Mexico and Canada.
In a slide presentation on Wednesday, it said it had reduced vehicle imports in April in response to tariffs, while relying on “solid inventories”.
But the group said it would also reassess capital spending plans between May and June, and calibrate “production and employment to reduce impacts on profitability”.
“Response and mitigation actions will continue to be refined as appropriate,” it said.
Presenting its 2024 results in February, Stellantis had given 2025 guidance for a mid-single digit adjusted operating profit (AOI) margin, positive revenue growth and positive free cash flow.
The suspended 2025 forecasts were based on the assumption of no changes to tariffs and global trade, a scenario upended by a slew of tariff announcements, and changes, by Mr. Trump this month.
In the first quarter, Stellantis’ net revenues fell 14 per cent year-on-year to 35.8 billion euros, “primarily due to lower shipment volumes, as well as unfavorable mix and pricing”, it said.
That compared with analysts’ forecast of 35.4 billion euros in a Reuters poll.
Jefferies analysts said in a note that they were struggling to find positive indicators in the results, while Bernstein noted some “positives”, including pricing ahead of expectations in all key regions, “although amid great uncertainties”.
Norwegian Cruise Line Holdings (NCLH-N) missed first-quarter revenue and profit estimates on Wednesday, as rising concerns about tariff uncertainty have pressured demand for the cruise operator’s premium sea voyages.
Shares of the company were down 7.8 per cent.
After benefiting from a post-pandemic surge, Norwegian Cruise has seen a slowdown in new bookings as consumers shy away from its high-end cruises and private island getaways amid looming concerns about a potential recession.
The cruise operator, which has been working on cost-savings measures such as streamlining its supply chain, also saw pressure from increased investments related to ship maintenance, more dry dock days and new fleet expansions.
The company said it is updating full-year 2025 net yield forecast - profit made per passenger after costs - to reflect recent booking trends and changes in the macroeconomic environment.
On a constant currency basis, annual net yield is expected to increase between 2.0 per cent and 3.0 per cent, compared with its previous forecast of 3.0 per cent.
Norwegian Cruise maintained its annual profit forecast of US$2.05 per share and said bookings for the 12-month period were softening but remain within the optimal range.
It logged adjusted profit of 7 US cents per share, compared with analysts’ estimates of 9 US cents.
Snap (SNAP-N) shares tumbled 12.4 per cent on Wednesday after the social media company held back its forecast, stoking fears that advertisers were cutting their spending due to tariff-led economic uncertainty.
Health of the advertising market will be yet again in focus when Meta Platforms (META-Q), which owns ad-reliant platforms like Facebook, reports results after the market closes.
The Snapchat parent said it was seeing a slowdown in ad spending in the second quarter and raised doubts about advertising budgets due to tariff impact.
Daily average U.S. ad spend by Chinese e-commerce websites Temu and Shein on Facebook, Instagram, Snap and Pinterest has fallen more than 50 per cent in the second quarter till date, according to Sensor Tower data.
Snap CFO Derek Andersen said spending for some advertisers were “impacted by the changes to the de minimis exemption” that allowed duty-free U.S. entry for merchandise from China and Hong Kong priced below $800.
The Trump administration closed the trade loophole through an executive order, which will take effect on May 2.
Snap is set to shed more than US$2-billion from its market valuation of US$15.42-billion , if premarket losses hold. At least 17 brokerages cut their price target for Snap, bringing the median to $10.
But Jefferies analysts said Snap is “being cautious more than signaling a broader ad market slowdown.”
With files from staff and wires