A grow room operated by Aurora Cannabis, which plans to convert a number of liquor outlets to sell marijuana, is seen bear Crenibam Alta., in 2015.Jeff McIntosh
The results at Power Corp. of Canada, and its subsidiary Power Financial Corp., are often less of a surprise than at other firms; after all, some of their major holdings, like the insurer Great-West Lifeco Inc., have already disclosed earnings, and analysts have adjusted as a result.
For the Powers, that has meant a lessening of expectations for Friday morning's numbers. Tom MacKinnon at BMO Nesbitt Burns Inc., for example, shaved a penny off his 69-cent EPS estimate for Power based on holding IGM Financial Inc. coming in three cents shy of expectations. In all, Power's average 70 cents EPS expectation and Power Financial's average 77 cents EPS forecast reflect average downward revisions of 2 per cent to 3 per cent in the last 30 days, according to Thomson Reuters Eikon.
The companies can still surprise, however, in either direction. Power has topped EPS expectations by 20 per cent in each of the last two quarters, while Power Financial has posted two double-digit beats. This, after a period where each company missed expectations in five of six quarters.
Investors may be looking for more than just a number Friday, however. As the Globe and Mail's Jacqueline Nelson reported Monday, there are signs that the company may embrace growth initiatives to juice a moribund stock price. Power has already said it will launch a private-debt fund and it's made another investment in an online portfolio manager.
The companies, which trace their roots back to 1925 and are still run by the founding Demarais family, have never been high on selling themselves on Bay Street, with no investor conference calls accompanying their financial results. But any announcement beyond the standard earnings may give the shares a lift.
Investment company Fiera Capital Corp. is also scheduled to release results before the market opens Friday.
In Canadian borrowing news, which can often flow through to equities, Barrick Gold Corp. said Thursday afternoon that S&P Global Ratings raised its long-term corporate credit rating to BBB from BBB-, with a stable outlook. This follows a similar upgrade by Moody's Investors Service on March 1.
Pembina Pipeline Corp., meanwhile, said it would issue $700 million of senior unsecured medium-term notes, with proceeds used to retire short-term debt and pay for capital spending.
You could say that the other stocks to watch Friday would be all of them, after a trade-war-inspired U.S. selloff sent the country's major indexes down more than 2 per cent Thursday. Into the teeth of the selling, however, Nike Inc. posted a colossal beat, reporting quarterly adjusted earnings of 68 cents per share. The mean expectation of 31 analysts for the quarter ended February 28 was for earnings of 53 cents per share. (The mean earnings estimate of analysts had fallen by about 16 percent in the last three months, making the beat easier.)
Post-market trading suggests Nike might rise Friday no matter what the broader markets do: An hour after markets shut, the shares were up 7 per cent, erasing a 2.9 per cent loss in the Thursday session.
Meanwhile, data-storage superstar Dropbox Inc. is poised to begin trading Friday after pricing its IPO Thursday night. The Wall Street Journal reported the company will offer its shares at $21, above the $18-to-$20 range it gave earlier this week, and a further boost from the initial $16-to-$18 guidelines.
That would value the company at about $7.5 billion, based on Dropbox disclosures about potential shares outstanding, but there could be a pop ahead Friday: Analyst Trip Chowdhry of Global Equities Research says that if MuleSoft Inc., which sold to SalesForce this week, is worth $6.5 billion, "then by the same token DBX is easily worth $20 billion." He bases both valuations on a multiple of 20 times sales, better justified by Dropbox's 30 per cent annual growth, versus MuleSoft's 25 per cent.
Friday also may be an active day in trading of Canadian pot stocks. The Senate Thursday night gave its approval in principle to the Trudeau government's bill to legalize recreational marijuana. Bill C-45 passed at second reading by a vote of 44-29.
There had been some uncertainty whether the bill would be passed; cannabis stocks may see a relief rally Friday after incurring significant losses Thursday. Both Canopy and the Horizons Marijuana Life Sciences ETF closed down 4.2 per cent Thursday, prior to the Senate vote.
Files from Reuters
David Milstead