A survey of North American equities heading in both directions
On the rise
Shares of Enbridge Inc. (ENB-T) gained 0.9 per cent after it raised its full-year profit forecast on Friday, as it benefits from its newly acquired assets and projects.
Enbridge has closed several deals so far this year, including a $4.3-billion deal to buy U.S. utility Questar Gas Company and Wexpro from Dominion Energy. Quester supplies gas in Utah, Southern Wyoming and Southeastern Idaho to about 1.2 million customers.
The company also sanctioned an expansion of its Gray Oak pipeline by 120 thousands of barrels per day (kbpd) in the Permian basin, and said the integration of Enbridge Gas Ohio and Enbridge Gas Utah was well underway.
Enbridge raised its expectation for full-year adjusted core profit between $17.7-billion and $18.3-billion, from its previous range of $16.6-billion to $17.2-billion.
It, however, reported a lower-than-expected profit in the second quarter ended June 30, partly hurt by weaker income from its Canadian gas transmission segment and higher interest rates that hiked borrowing costs and hurt demand.
Quarterly adjusted core profit from Enbridge’s Canadian Gas Transmission segment was down 30 per cent to $98-million from a year earlier, while adjusted core profit from its Mainline System fell 9.3 per cent to $1.32-billion in the quarter.
In contrast, peer TC Energy (TRP-T), which is in the process of spinning off its oil business, reported a profit beat on Thursday, helped by higher volumes of natural gas transported through its system and said it expects the AI boom to further fuel demand.
Enbridge reported an adjusted profit of 58 cents per share, compared with analysts’ average estimate of 64 cents, according to LSEG data.
Apple Inc. (AAPL-Q) was higher by 0.7 per cent after reporting its third-quarter iPhone sales were better than expected and forecasting more gains on Thursday as it bets on artificial intelligence to attract buyers, even as its overall China business disappointed.
Apple is expected to launch this fall what analysts have called the biggest software upgrade for the iPhone. It includes artificial intelligence features and comes at a time when rivals such as Samsung have been quicker to roll out similar services.
Apple said revenue in its fiscal fourth quarter would grow at a level similar to the 4.9-per-cent increase it posted in the April-June period, which was better than analysts’ estimates.
Sales of iPhone also improved in the third quarter, falling just 0.9 per cent compared with the 2.2-per-cent drop analysts expected.
Chief Financial Officer Luca Maestri told Reuters in an interview that the iPhone results were better than he had expected three months ago. “The iPhone 15 family has been doing well from the very beginning and still now - we have three quarters of the year behind us. It is performing better than the previous cycle, the iPhone 14.”
Still, China - Apple’s third-largest market - remained a drag as sales there declined 6.5 per cent. While that was an improvement from the 8.1-per-cent decline in the previous quarter, it was wider than expectations for a drop of 2.4 per cent, according to Visible Alpha.
Mr. Maestri said China sales fell less than 3 per cent, excluding the effects of foreign exchange and added that he feels good about Apple’s performance in that country, given any softness in its economy.
Apple has taken to discounting its iPhones in China to compete with the much cheaper alternative smartphones offered by local competitors such as Huawei. The company in May offered discounts of up to 2,300 yuan (US$317) on selected models.
Analysts expect a strong upgrade cycle for the iPhone 16 series, likely to be launched in September. The company unveiled a raft of AI products and services it calls Apple Intelligence at its developer conference in June.
To operate Apple Intelligence requires at least an iPhone 15 Pro, which may push consumers to upgrade their devices.
Apple’s quarterly earnings per share were US$1.40, above Wall Street estimates of US$1.35, according to LSEG data.
Sales in Apple’s services segment, which includes the App Store and represents Apple Music and TV products, rose 14.1 per cent to US$24.21-billion, above analyst expectations of US$24.01-billion, according to LSEG data.
Apple maintained its dividend at 25 US cents. In the fiscal second quarter, Apple announced a US$110-billion stock buyback.
On the decline
Magna International Inc. (MG-T) was lower by almost 6 per cent after missing analysts’ estimates for second-quarter results on Friday, hurt by production being stopped for certain vehicles and lower volumes of automobiles that it assembled.
Magna, which counts BMW, Mazda and Ferrari as customers, produces parts and builds vehicles at its complete vehicle manufacturing unit for various automakers.
“Sales were negatively impacted by the end of production of certain programs, lower complete vehicle assembly volumes, including as a result of the end of production of the BMW 5-Series,” Magna said.
Quarterly sales at its complete vehicles unit, which assembles models for global carmakers, fell 18.6 per cent to US$1.24-billion.
Demand for Magna’s parts and services had risen over the past few years, but that has taken a hit with automakers shifting away from their costly electric vehicle plans to focus on gas-powered models.
Rival Aptiv beat Wall Street expectations for quarterly profit on Thursday. However, revenue from the company’s segment which makes electrical components declined 3 per cent due to a reduction in production by some customers.
In May, Magna recorded asset impairments and restructuring costs of US$316-million related to embattled EV startup Fisker.
Ontario-based Magna lowered its 2026 sales forecast range to US$44.0-billion to US$46.5-billion, compared with its prior view of US$48.8-billion to US$51.2-billion.
On an adjusted basis, the company earned US$1.35 per share in the second quarter ending June, compared with estimates of US$1.44, according to LSEG data.
Magna’s quarterly revenue fell marginally to US$10.96-billion. Analysts had expected revenue of about US$11-billion.
In a research report, Citi analyst Itay Michaeli said: “Our concerns over a Q2 miss were met with adj. EPS of $1.35 missing the $1.44 Bloomberg consensus (Citi $1.34). However, 2024 guide looks more resilient than we expected — with revenue essentially intact, midpoint operating margin of 5.6 per cent ahead of our 5.4 per cent, net income confirmed and capex down by $0.1-billion. The guide implies a solid H2 margin of 6.5 per cent vs. 4.8 per cent in H1, though Magna’s 2024 industry production assumption doesn’t look as conservative as peers — we’ll look for more details on the call. Updated 2026 outlook confirms slower revenue growth ($45.3-billion midpoint vs. our $46.4-billion, implying 1 pt GoM) but with stronger margins (6.7-7.4 per cent vs. our 6.5 per cent -implying 39-per-cent incremental vs. 2024), and lower capex ($1.7-billiob vs. our $1.9-billion). Stepping back, we think the reaction will hinge on the degree of confidence in the H2/H1 and 2024-26 margin bridges, which along with lower capex, set up for an improving FCF story.”
Imperial Oil (IMO-T) declined 1.5 per cent on Friday after it reported a 68-per-cent jump in second-quarter profit, as the integrated oil firm was helped by higher crude prices and production.
Extension of a production cut by OPEC+, forecast of strong travel demand and hopes of interest rate cuts by the U.S. Federal Reserve helped lift crude prices nearly 7 per cent in the April-June quarter compared to last year.
Upstream production rose 11.3 per cent to 404,000 gross barrels of oil equivalent per day (boepd), its highest second-quarter production in over 30 years, after adjusting for the divestment of XTO Energy, the company said.
Separately, Imperial’s majority shareholder and oil and gas major Exxon Mobil beat Wall Street’s expectations for second-quarter profit earlier in the day, helped by an increase in oil production.
The Calgary-based company said its net profit rose to $1.13-billion, or $2.11 per share, in the quarter ended June 30, from $675-million, or $1.15 per share, last year.
Open Text Corp. (OTEX-T) fell 6.5 per cent after saying it earned US$248.2=million in its fourth quarter, up from a loss of US$48.7-million a year earlier.
Full reaction to Open Text's results: Friday's analyst upgrades and downgrades
The Waterloo, Ont.-based company says revenues for the quarter totalled US$1.4-billion, down from US$1.5-billion during the same quarter last year.
Diluted earnings per share were 91 US cents, up from a loss of 18 US cents a year earlier.
The company’s full-year earnings were US$465.1-million, up from US$150.4-million in the previous financial year.
CEO Mark Barrenechea says the company saw its revenues for the full year rise 29 per cent to US$5.8-billion.
The company says it completed a US$2-billion reduction in debt during the quarter. It also announced it’s increasing its annualized dividend by five per cent to US$1.05 per share.
Telus International Inc. (TIXT-T) slashed its previous earnings forecast and announced a leadership shakeup that will see its chief executive retire. The company’s shares plunged 36 per cent from their previous close in Friday morning trading.
The Canadian technology company, controlled by telecom giant Telus, said it now expects full year revenue to come in at a range of between $2.61-billion and $2.65-billion, down from previous guidance of $2.79-billion to $2.85-billion. It said adjusted earnings before interest, taxes, depreciation and amortization should hit a range of $465-million to $485-million, down from the $623-million to $643-million range previously expected.
Profit margins and adjusted earnings per share were also revised downward.
The digital IT services company said it no longer assumes that demand will recover as strongly, particularly in the second half of the year. It also said its margins should stabilize at current levels for the remainder of 2024 and that cost-cutting initiatives won’t generate as many savings in the near term that management previously thought.
- Nicolas Van Praet
Shares of Amazon (AMZN-Q) dropped 8.8 per cent on Friday after the online retailer reported slowing online sales growth in the second quarter and said consumers were seeking out cheaper options for purchases.
The commentary from the online shopping behemoth is in line with recent value-conscious consumer behavior, ahead of retail giant Walmart’s quarterly results later this month.
Amazon CEO Andy Jassy said on a post-earnings call that customers were trading down on price when they could.
“Consumer spending trends facing retail peers appear to have finally caught up with Amazon’s P&L,” MoffettNathanson analyst Michael Morton said.
Amazon’s online stores sales rose 5 per cent in the second quarter to US$55.4-billion, compared with growth of 7 per cent in the first quarter.
The company’s quarterly profit and cloud computing sales, however, beat analysts’ estimates.
Revenue at Amazon Web Services, its cloud unit, rose a better-than-expected 19 per cent to $26.3 billion, days after Microsoft’s cloud division Azure fell short of market estimates and sparked more concerns around Big Tech’s hefty AI spend.
Seattle-based Amazon is playing catch up with rivals Microsoft (MSFT-Q), which partners with OpenAI, and Google (GOOGL-Q) in developing its own so-called large language models that can respond nearly instantly to complicated queries or prompts.
Amazon’s forward price-to-earnings ratio for the next 12 months, a common benchmark for valuing stocks, was 33.92, compared with Alphabet’s 20.46 and Microsoft’s 30.88, according to LSEG data.
Intel Corp. (INTC-Q) sank over 26 per cent on Friday and were set for their worst day since 1974 after the company suspended dividend and slashed workforce to fund a costly turnaround for its chip-making business.
The company lost about US$35-billion in market value as its disappointing forecast and planned 15-per-cent job cuts raised worries about its ability to catch up with Taiwan’s TSMC and other chipmakers.
The Santa Clara company was once the world’s leading chipmaker, with the “Intel Inside” logo a valuable marketing feature on personal computers in the 1980s and 90s.
Part of the dot-com era’s Four Horsemen - along with Cisco Systems, Microsoft and Dell - Intel’s stock market value peaked at nearly US$500-billion in 2000 before slumping in that year’s market selloff and never fully recovering.
It continued to dominate in hefty PC chips, but was caught off foot by the launch of Apple’s iPhone in 2007 and other mobile devices that demanded lower power and less pricey processors.
If Friday’s losses hold, Intel’s market capitalization would fall to about US$100-billion, equivalent to less than 5 per cent of Nvidia’s and about 40 per cent of Advanced Micro Devices’ , the two PC chipmakers it heavily dominated for decades until recently.
The selloff was also set to leave Intel worth less than Applied Materials and Lam Research, companies that supply equipment for Intel’s fabrication plants.
“Intel has been one of the forgotten horsemen of technology the last couple decades,” Michael Schulman, chief investment officer of Running Point Capital said. “Never overtaking its year 2000 highs and struggling to get earnings back to where they were before the AI revolution.”
Chevron Corp. (CVX-N) reported second-quarter earnings on Friday that missed Wall Street estimates due to industry-wide pressure from lower refining margins and natural gas prices, sending its shares down.
The company earlier had warned oil output this quarter would slip and refining would suffer from turnarounds at two refineries in California. Refining margins have been weak globally, hurting other oil majors like BP and Shell .
Chevron said it would relocate the company’s headquarters from San Ramon, California, where it was born 145 years ago as Pacific Coast Oil Co, to Houston. The company has been bitterly contesting state regulations on its oil producing and refining operations in the state.
Chevron reported earnings of US$4.4-billion, or US$2.43 per share, in the quarter, compared with US$6-billion a year before.
It reported adjusted earnings of US$4.7-billion, or US$2.55 per share, compared to US$2.93 expected by Wall Street analysts, according to LSEG data.
“Results were disappointing,” said Peter McNally, global sector lead for energy at Third Bridge.
The shortfall can be attributed to the international upstream segment, which missed expectations by approximately 11 per cent, he said.
Earnings from pumping oil and gas were down 9.4 per cent from a year earlier. Profit from producing gasoline and chemicals was also down about 60 per cent to US$597-million.
“Despite recent operational downtime and softer margins, we remain poised to deliver significant long-term earnings and cash flow growth,” CEO Mike Wirth said.
Bank of America (BAC-N) declined on news Berkshire Hathaway (BRK.B-N), run by billionaire Warren Buffett, extended its selling of its shares, and has shed more than US$3.8-billion of the second-largest U.S. bank’s stock since mid-July.
Berkshire sold approximately 19.2 million Bank of America shares for about US$779-million between July 30 and Aug. 1, according to a Thursday night regulatory filing.
Mr. Buffett’s conglomerate has sold 90.4 million Bank of America shares since July 17.
It remains the Charlotte, North Carolina-based bank’s largest shareholder, owning 942.4 million shares, or about 12.1 per cent of reported shares outstanding, worth about US$37.2-billion.
Berkshire must continue reporting sales until the stake falls below 10 per cent. It will report second-quarter earnings on Saturday morning.
The sales began after Bank of America’s stock price had risen by about two-thirds since late October, and traded at more than 1.2 times book value.
That boosted the value of Berkshire’s shares to over US$45-billion, more than triple the US$14.6-billion it paid for them.
Berkshire has invested continuously in Bank of America since 2011, when it bought $5 billion of preferred stock.
That purchase signaled Buffett’s confidence in Bank of America Chief Executive Brian Moynihan’s ability to restore the bank to health following the 2008 financial crisis.
Mr. Buffett, 93, one of the world’s most revered investors, told CNBC in April 2023 he liked Mr. Moynihan “enormously” and at the time did not want to sell the bank’s stock.
Berkshire is based in Omaha, Nebraska. Its operations include Geico car insurance, the BNSF railroad and several dozen other insurance, energy, industrial and retail businesses.
With files from staff and wires