It was a very strong week on the markets, with the NASDAQ gaining 6%, the S&P 500 4.4%, and the TSX 3.1%.
It was a particularly strong week when it comes to Premium featured companies and their earnings. Thus far, they’ve posted exceptional earnings across the board and we’re happy to enter earnings season on a high note.
If you’re new to Premium, we go over our highlighted companies and update their reports every single quarter. We’re one of the only platforms in the country to do this, and it provides members with an up-to-date view on companies they may own or want to buy, 4 times a year.
This e-mail will mainly be focused on the companies that have reported earnings thus far.
But first, an update on our screeners
Our brand new stock screener has gone through the first initial bug fixes we spotted right off the bat, and I’m happy to say we’ll be sending it out to Premium members who would like to beta test the screener tomorrow.
This screener is a game changer. In fact, it helped us shave off hours of research when identifying our newest Bull List stock Stella Jones. Now that it’s near completion, I find myself using it multiple times a day.
So many stock screeners these days are stuffed with irrelevant metrics that lead to analysis paralysis. Our screeners only contain the metrics that we have used to identify strong companies over the duration of our investment careers, and it’s going to be a massive tool in Premium members’ arsenals to outperform. This will be a continually evolving tool here at Premium, with many features and new metrics to be added.
We know the bear market has been difficult for a lot of members. So, the development of this platform absolutely free of charge to current Premium members is our way of continuing to provide value even when the markets are struggling.
If you’d like to participate in the beta testing of our screener, just send me an e-mail.
If you already opted in last time, there is no need to do so again.
Foundational Stock earnings
Fortis (FTS)
Fortis proves time again why it is one of the rare stocks that you can “set and forget”. This isn’t a flashy company, but as a Foundational Stock, you can expect consistent performance year in and year out.
This past quarter, Fortis beat yet again on the top and bottom lines. Earnings of $0.57 beat by $0.11 and revenue of $2.49B beat by $240M and represented 16.9% growth year over year. The company also re-iterated long-term growth rates and expects annual dividend growth of 6% annually.
There really wasn’t much else that stood out. That isn’t a bad thing – the company just continues to quietly do its thing. Since the 2020 crash and into the post-pandemic era, Fortis has put up strong returns with virtually zero volatility. The company’s beta of 0.18, which means the company is about 1/5 as volatile as the overall market, backs this up.
TC Energy (TRP)
TC Energy delivered a quarter that was in line with estimates. Earnings of $1.00 beat by $0.02 and comparable EBITDA jumped from $2.2B to $2.4B year over year. The company is benefiting from high utilization rates across its assets and points to the growing “demand for clean, responsibly sourced natural gas” as a key driver in North America.
The company also re-iterated all previously stated Fiscal 2022 guidance. Once again, not much to be surprised about here. TC Energy has put up strong returns in 2022, returning 20% on the year while the TSX Index has lost 6%.
CN Rail (CNR)
In our opinion, CN Rail delivered one of the most impressive financials of the quarter thus far. The company handily topped on both the top and bottom lines.
Earnings of $1.93 beat by $0.17 and revenue of $4.34B (+20.6% Y/Y) beat by $250M. Railways are considered bellwethers of the economy and given we are in a recessionary period, supply chains persist and inflation is rising, the company’s performance is quite impressive.
Worth noting, that despite these headwinds CN Rail once again re-iterated guidance for 15-20% earnings growth and for free cash flow to be between $3.7-4B. The market welcomed such a strong report, and its share price closed the week up 8%. The company is once again in the green on the year (5.42%) and is outperforming the TSX Index which is down 7.21% YTD.
The railways have been under significant pressure since early April. This quarter seems to have ended that downtrend, and it will be very interesting to see where CN Rail goes from here.
Growth Bull List earnings
Aritzia (TSE:ATZ)
Aritzia posted very strong first quarter Fiscal 2023 earnings. Earnings per share of $0.35 came in 15% higher than expected, revenue of $407.91M topped expectations by 8.6%, and EBITDA of $69.65M was 13.63% higher than predicted.
Comparable sales growth at its stores came in at a very strong 29.4%. The company has grown revenue by 65% year-over-year, net income by 85.8%, and adjusted EBITDA by 70.3% over the same time periods. It’s important to note that this growth rate on a year-over-year basis is unsustainable and looks large mainly due to the fact that Q1 of Fiscal 2022 (which would have been early 2021) was when North America was in a full lockdown due COVID-19. As a result, Aritzia’s sales struggled in that quarter and YoY numbers are now bloated.
With that said, growth is still large and this company is continuing to see large momentum, so much so that it raised revenue guidance for this year.
The US eclipsed Canadian revenue in the quarter, making up 50.7% of sales and its expansion plans the US seem to be going extremely well. The company did increase the amount it expects margins to dip this year from 1% to 1.5%, but this is a relatively minor impact when we consider the entire success of the quarter.
You can read our full report on Aritzia here
TFI International (TSE:TFII)
We’re still working on our fully updated report on TFI International. However, the company reported a very strong quarter. Revenue of $2.42B beat estimates by $140M and earnings of $2.61 beat by $0.81.
We’ll have more information on how TFI performed on the quarter in next week’s e-mail when we get our report updated.
Dividend Bull List earnings
TMX Group (TSE:X)
TMX is a company that flies under the radar and it really shouldn’t. TMX has a considerable moat and is proving its resilience despite a challenging macro environment.
The company beat on the top and bottom lines as earnings of $1.88 beat by $0.13 and revenue of $286M beat by $6M. Approximately 50% is recurring revenue and some areas of the business will actually benefit from rising rates.
While it is a financial stock, it is much different and should not be lumped in with your traditional financials like banks, insurers, and alternative lenders. All in all, thanks to the strong quarter it is now in the green on the year and outperforming the Index.
You can read our full updated report on TMX Group here
A&W Royalty Income Fund (TSE:AW.UN)
A&W Royalty reported royalty income growth of 15.9% when compared to Q2 2021, and 14.7% on a year-to-date (YTD) basis when compared to 2021.
Although this growth is strong, it’s likely unsustainable as right now. We’re comparing 2022 to two lockdown quarters in 2021. So, it’s important to take that into account, but also not let it put a damper on how strong this company is growing overall.
Same-store sales growth was 12.2% YoY and 12% YTD when we compare to the first two quarters of 2021. The company has added 21 new restaurants to the royalty pool thus far in 2022, and gross sales reported by its restaurants are up nearly 15% when compared to last year.
The company’s payout ratio came in at 89.2% in the quarter. If you remember from last quarter, the company reported a payout ratio in excess of 110%. We highlighted the fact that this was simply due to the timing of some income tax payments and that the distribution payout ratio would come down to normal levels. We’re seeing this in the most recent quarter.
Overall, all signs point to a very healthy royalty company.
You can read our full report on A&W Royalty here
Intact Financial (TSE:IFC)
Intact Financial delivered another strong quarter yet again. The company posted EPS of $6.64 and revenue of $6.23B, while estimates were for $2.705 per share and $4.89B in revenue. This may look like a gigantic beat on earnings, which it was, but it’s important to note that this is primarily due to gains in the equity market, and isn’t from core business operations.
Earnings are earnings nonetheless. However, it’s very likely we see EPS dip in quarters moving forward. When we compare the first six months of 2022 to 2021, there is some large growth here for Intact. Premiums written are up by 63%, earnings per share are up by 29%, and the acquisitions the company has made, particularly RSA last year, are realizing very strong synergies.
The company continued to post an industry-leading return on equity of 18.5% and increased its book value per share to $80.86. Overall, the company continues to put up exceptional results, and it’s really not all that surprising to see Intact Financial making all-time highs while the rest of the financial market is in a 6-month drawdown.
You can read our full report of Intact Financial here
Earnings coming up this week:
Open = market open
Close = market close
- QSR – Aug 4 (open)
- LSPD – Aug 4 (open)
- PKI – Aug 4 (close)
- WCN – Aug 2 (close)
- TIXT – Aug 5 (open)
- OTEX – Aug 5 (close)
- T – Aug 5 (open)
- CSU – Aug 4 (close)
- SBUX – Aug 2 (close)
