Canadian Stocks Advance on Earnings at Suncor, Potash Corp.; Cenovus Slips
Canadian stocks rose for the first time in three days as Suncor Energy Inc. and Potash Corp. of Saskatchewan reported earnings that beat analyst estimates and insurers rallied.
Suncor, Canada’s largest oil and gas producer, gained 2.6 percent after topping analyst forecasts by 42 percent, the most in records dating back to 2005. Manulife Financial Corp., North America’s third-biggest insurer, jumped 4.3 percent on speculation new regulations won’t affect the company as much as previously thought. Cenovus Energy Inc., Canada’s sixth-largest energy company by market value, sank 4.8 percent after missing the average analyst estimate of profit by 53 percent.
The Standard & Poor’s/TSX Composite Index rose 32.01 points, or 0.3 percent, to 11,728.64.
“Both in Canada and in the U.S., we’ve seen some pretty decent earnings,” said Sadiq Adatia, who helps manage C$12 billion ($11.6 billion) as chief investment officer at Russell Investment Canada in Toronto. “It really is hinting the economy is starting to get back on track. We’re starting to see some top-line revenue growth. We are starting to see money put back into R&D. That’s going to help spur further revenues going forward.”
The S&P/TSX has fallen 0.1 percent this year as economic data indicating a slow recovery has overshadowed stronger-than- estimated corporate earnings. Of 23 companies in the S&P/TSX 60 index that have reported quarterly earnings since July 12, 14 have topped the average analyst forecast.
Suncor Gains
Suncor gained 2.6 percent to C$33.91 after operating earnings quadrupled from a year earlier to C$781 million ($756 million), reflecting the August 2009 purchase of Petro-Canada and higher fuel prices.
Potash Corp. of Saskatchewan Inc. advanced after reporting second-quarter earnings that beat the average of 26 analyst estimates by 14 percent, excluding certain items. The world’s largest fertilizer producer also increased its 2010 profit forecast to a range of $5 a share to $5.50 a share from the $4.50 a share to $5.25 a share range announced in April.
Fertilizer companies climbed further after Potash Corp. Chief Executive Officer Bill Doyle said in a conference call Chinese potash demand will rise 29 percent next year. Potash Corp. rallied 4.6 percent to C$106.39, while Agrium Inc., Canada’s second-largest fertilizer producer, increased 3.2 percent to C$64.62.
Trucking company TransForce Inc. surged 7.7 percent, the most in 13 months, to C$10.05. The company’s second-quarter earnings surpassed the average of four analyst estimates by 41 percent.
Earnings Miss
Cenovus said earnings excluding certain items were 19 cents a share, missing the 40 cent average of analyst estimates. Second-quarter operating earnings shrank 72 percent from 2009 due in part to lower natural gas prices, declines in gas production, increased royalty payments and refinery maintenance, the company said in a press release. The stock fell 4.8 percent to C$28.54.
The S&P/TSX Insurance Index climbed to a one-month high after Canada’s Office of the Superintendent of Financial Institutions said new capital requirements for variable annuities will only affect new business, not existing business.
The announcement “is most obviously positive for Manulife
To contact the reporter on this story; Matt Walcoff in Toronto at mwalcoff1@bloomberg.net
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