Canaccord’s global growth powered it to results that beat the consensus forecast.
Anyone who spent time talking to executives at Canaccord Genuity Group Inc. over the past year got the distinct impression they believed that analysts and investors were missing the earnings power the firm had after a global expansion.
The Toronto-based brokerage has spent the past three years expanding in London, retooling in New York and hiring senior bankers all around the globe. Deals have been starting to flow in in recent quarters from some of those initiatives, but the market took little notice. The firm's stock still traded more like a Canadian-focused brokerage mired in a market slowdown, and in fact lagged rival GMP Capital, which is much more Canada-focused and has been less profitable in recent quarters.
That may change after Canaccord posted a bit of an "I told you so" earnings report that beat analysts' expectations, almost entirely powered by the revenue coming in from places like London, New York, Singapore and Sydney. In the quarter, 68 per cent of revenue came from outside Canada, driven by a 75-per-cent jump in financings the firm underwrote.
Canaccord reported profit of $18.3-million or 14 cents a share, up from $10.3-million or 8 cents a year earlier. On the basis tracked by analysts, which excludes some expenses, Canaccord earned 17 cents a share, beating the 15-cent consensus.
Canaccord also kept expenses in check, which will please analysts who have been critical of the firm's outlays. Overall expenditures fell 5 per cent.