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We’re right in the thick of it in terms of earnings season, with plenty of companies reporting that are featured at Stocktrades Premium. This week will be dedicated to covering a lot of them.
As always, I can’t highlight all of the reporting companies inside these newsletters. It would simply be way too much to read. This is why logging into the website as often as possible to view all of the commentary is the best way to utilize Premium to its fullest potential.
After you log in, you can also access the Q&A, which often has 3-4 brand new questions daily, my stock screeners, and so much more.
Let’s dive right into it. But first, I want to cover a huge move I am making with my portfolio.
I’m moving back to Questrade
I honestly believe this is one of the best times in history to be a self-directed investor. Not only have annual returns from the markets been exceptional, but the discount brokerage scene is becoming hyper-competitive, and platforms are doing everything they can to gain clients.
As self-directed investors, there are huge opportunities for us to take advantage of this.
Questrade’s recent deal to go $0 commissions on all stocks and ETFs and also offer large bonuses for new and existing clients to transfer assets in is yet another opportunity for retail investors to take advantage of the competitiveness in the brokerage space.
I enjoyed Wealthsimple’s commission-free system and fractional trades. However, now that Questrade has gone $0 commissions and is introducing fractional shares in the near future, I believe they have levelled up to become the best platform in the country.
And to add to all of this, they’re offering a 3% cash bonus on the first $10,000 of deposits and 1.5% on the remaining, up to a maximum of $10,000.
For this reason, I’ll be moving all my accounts out of Wealthsimple and into Questrade. In fact, I already started the process late last week.
By taking advantage of deposit bonuses from brokerages, I’ve now earned over 5 figures in 2.5 years.
Because of this move, I won’t be able to make any moves in my portfolio until the transfer is complete, as any transactions will cause issues with the underlying transfers.
If you’re interested in taking advantage of the offer from Questrade, I’ll drop a link to it below. We are partnered with Questrade (and have been since 2017), so full disclosure, I do get a small amount of money when accounts move over.
Of note, make sure you read the withdrawal restrictions on the account as well. For those with a longer time horizon, this will likely be a non-factor. But for those drawing down on their portfolios, it could be an issue.
Click here to see what the transfer bonus is all about.
Earnings
Brookfield Corporation (TSE:BN)
Brookfield continues to post outstanding results and is further cementing the case that it is one of the best asset managers in North America.
The company reported a quarterly record in terms of distributable earnings, coming in at $1.6B on the quarter, or $0.94 a share (see the chart above). When we look to the full year, the company posted distributable earnings of $3.07 which is a 15.4% increase from Fiscal 2023 numbers.
At this point, one of the main drivers of the business is the asset management (BAM) side of things. Fee-related earnings grew by 17% year-over-year, and the company continues to raise record amounts of capital. I’ve attached an image of the company’s fee-related earnings below. This is an important KPI for the company, as it is a very high-margin, profitable segment of the business.
Its Wealth Solutions segment, particularly on the insurance side of the business, also continues to excel. In fact, it is the main driver of distributable earnings growth.
On a year-over-year basis, its Wealth Solutions segment saw distributable earnings grow by a whopping 82%. On the flip side, the company’s infrastructure segments, like Brookfield Renewables and Brookfield Infrastructure, are also growing, albeit at a much smaller pace.
Renewables saw distributable earnings grow by about 2.6% and Brookfield Infrastructure by 5%. Brookfield Business Partners reported a single-digit decline in year-over-year distributable earnings.
Despite the company’s infrastructure segments struggling, it is posting exceptional growth in the financial segments. Distributable earnings came in at $6.27B on the year, which is a 30% year-over-year increase. So, it shouldn’t be any surprise that Brookfield has been one of the best large-cap stocks on the Toronto Stock Exchange over the last couple of years.
The company’s size is really starting to become apparent, as it has over $160B in capital to deploy into new investments. This includes nearly $70B in cash, with the remainder being undrawn credit facilities.
At this point in time the company is able to earn returns on its investments much higher than the overall cost of its capital, highlighted by the fact its Wealth Solutions segment has an average yield of 5.4%, while its cost of capital sits at 3.6%. Ultimately, this will allow the company to continue to generate solid returns from its investments and, thus, higher distributable earnings for investors.
Brookfield is trading at around 15x its distributable earnings. When we look to a company like Brookfield Asset Management, it is trading at nearly double the valuation. Because of the asset management’s success over the last couple of years, I’m not surprised there is a premium valuation attached to that end of the business.
After all, Brookfield Corporation does have some of the discounted segments of the business lumped into the corporation, like its real estate, renewable energy, and infrastructure segments.
However, I believe that this valuation is discounted right now, and out of all the subsidiaries, I believe the rollup in Brookfield Corporation is providing the best value for investors at the moment. Once the renewable and infrastructure segments rebound, this should be a continued tailwind on results.
Waste Connections (TSE:WCN)
It was a mixed quarter from Waste Connections. Revenue of $2.26B came in line with expectations, but earnings per share of $1.16 fell shy of estimates for $1.18. This marks the first time Waste Connections has missed earnings estimates in over 2 and a half years.
However, this small miss is nothing to worry about, as it was an exceptional year from the company, and its 2025 guidance was relatively upbeat.
The company grew revenue by 11.2%, net income by 15%, and generated over $1.21B in free cash flows on the year. The year was also a record for acquisitions, adding over $750M in annual revenue. Before I get into the guidance, I’ll go over some core numbers.
The company continues to see declines across the waste management side of things in terms of volumes, as they declined by 3.2%.
However, its recycling segment did put up 0.7%~ growth on the year after 2 straight quarters of declines. On the bright side, and this has been the case for Waste Management for quite some time, it is more than able to offset the smaller amounts of volume with strong pricing growth. Look to the chart below.
The company’s total pricing growth came in at 6.7% on a year-over-year basis, and although this isn’t the larger levels of growth we witnessed through 2023 and the earlier half of 2024, these are still some strong numbers.
With inflation cooling, core pricing growth was no doubt going to cool as well, but it still remains the core thesis for me with this company in the fact that it has such large pricing power due to its moat – it can offset any sort of headwinds by just raising prices.
On the the company’s Fiscal 2025 guidance, it expects to generate revenue of $9.45B-$9.6B, net income between $1.18B-$1.22B, and free cash flow of $1.3B-$1.35B. This would represent growth of 8% on revenue, nearly 100% growth on net income (there were some one-off costs that impacted net income in 2024), and 11.5% growth in free cash flow. All of these growth numbers are assuming the top end of guidance.
The company also expects to continue expanding its EBITDA margins by around 80 basis points (0.8%) to sit at 33.3%. The company expects that it will come in at the higher ends of this guidance or even exceed it due to its strong acquisition-based pipeline, along with the expectation that its commodity-based revenues (oil and gas, for example) will improve with the economy.
The company showed a bit of weakness post-earnings, likely due to the miss on earnings expectations, but it still continues to execute wonderfully, and the thesis remains intact here.
This is a company with a large economic moat that allows it to continually raise prices to offset smaller volumes, and has displayed its ability to make key tuck-in acquisitions that allow it to expand its footprint in North America.
When volumes inevitably pick back up, the company will then realize that pricing growth on accelerating volume, which should compound earnings and sales. Although valuations are expensive here, historically they always have been, primarily due to the reasons I mentioned above.
Intact Financial (TSE:IFC)
Intact reported a quarter that certainly re-affirms my thoughts around the company’s addition to the Canadian Foundational Stocks list in place of Royal Bank. Revenue of $5.755B came in ahead of expectations for $5.6B, and earnings per share of $3.58 fell shy of expectations for $3.84.
However, the more important metric when we look to insurers is net operating income per share, or NOIPS. In this regard, the company reported NOIPS of $4.93, topping estimates of $4.34 by a wide margin.
Insurance companies have large investment portfolios, which is primarily what they utilize to generate profits off of premiums earned. EPS includes realized and unrealized investment gains/losses, which can be highly volatile and do not necessarily reflect the core profitability of the insurance business. NOIPS isolates these out.
The company’s combined ratio (chart above) came in at 86.5%, which is an exceptional ratio for a property and casualty insurer.
This combined ratio compares premiums collected to claims paid. 86.5% means that for every $100 in premiums that Intact is generating it is paying out $86.50 in claims. The company’s total combined ratio on the year came in at 92%~, which is relatively high from a historical basis.
However, a lot of this had to do with large catastrophe losses (notice the large spike above 100% in September of 2024) and some weakness in the European market, which is now stabilizing. I expect this ratio to trend downwards over the next few years, despite already being one of the best in the industry.
The company’s premiums written (chart below) increased by 5%, and its book value now sits at $92.67, a 13% increase on a year-over-year basis.
The company is still seeing some weakness in its UK segment, but it isn’t as bad as it was earlier in the year. Premiums written declined by 2%, but the UK segment’s combined ratio decreased materially, going from 104.6% down to 92.7%.
So, although the segment isn’t necessarily growing in terms of premiums, profitability to the segment has returned. Its Canadian arm grew premiums by 8% and its US segment by 3%, more than picking up the slack. Both segment’s combined ratios came in in the low 80% range.
The main driver of the company’s growth at this point is its personal lines, that being automobile and personal property insurance. Commercial lines are still growing, albeit at a slower pace.
The company’s debt-to-total capital ratio came in at 19.4%. This is a key ratio for an insurer, as it highlights the amount of business operations that are financed with equity versus debt.
Due to an acquisition in 2023 of Direct Line Insurance Group’s commercial lines in the UK, this ratio increased to nearly 23%. Ultimately, a lower debt-to-total capital ratio is best, and with the ratio now coming in at 19.4%, we are back to what the company’s ratio typically sits at.
This highlights the prudence of Intact, prioritizing repairing its balance sheet post-acquisition as quick as possible in order to integrate acquisitions. Ultimately, the faster it can do so, the more profitable tuck-in acquisitions will be. They got this ratio back under control much faster than I expected.
The company issued its 12-month outlook for 2025, expecting personal property and auto premiums to grow by double digits, and commercial lines to grow by mid-single digits.
Overall, it was an outstanding quarter from Intact, which remains a core position in my portfolio and, in my opinion, the best P&C insurer in North America.
