Canadian Stocks Rise as Royal Bank, TD Beat Earnings Estimates
Canadian stocks rose as Royal Bank of Canada (RY) and Toronto-Dominion Bank (TD), the nation’s biggest lenders, paced gains among financial companies after boosting their dividends following higher-than-estimated earnings.
Royal Bank gained 2 percent, and TD rallied 1.5 percent. Bombardier Inc. (BBD/B), a maker of trains and airplanes, slumped 9.5 percent after missing analysts’ average sales estimate for a third straight quarter. Ithaca Energy Inc. (IAE), which explores for oil and gas in the North Sea, jumped 13 percent after saying it received more interest in a possible takeover.
The S&P/TSX Composite Index (SPTSX) advanced 79.45 points, or 0.6 percent, to 12,723.46.
“The markets were clearly surprised,” Andrew Pyle, an associate money manager on a Bank of Nova Scotia team that oversees about C$200 million ($200 million), said in a phone interview from Peterborough, Ontario. “A lot of investors thought the financials would keep money tight to the vest.”
The S&P/TSX gained 5.8 percent in January and February, its best start to a year since 2004, as U.S. unemployment dropped to the lowest in almost three years, Greece agreed to terms for a second bailout and oil prices advanced on tension between Iran and Western countries.
Royal Bank’s first-quarter earnings beat the average analyst estimate in a Bloomberg survey by 9.7 percent, excluding certain items. The company raised its quarterly dividend 5.6 percent. TD, its largest domestic rival, surpassed forecasts excluding certain items by 5.1 percent and increased its payout 5.9 percent.
The S&P/TSX Financials Index (STFINL) rallied to the highest level since July. Royal Bank climbed 2 percent to C$56.80, extending its streak of gains, the longest in two years, to eight days. TD rose 1.5 percent to C$82 after closing at the highest since July yesterday. Manulife Financial Corp. (MFC), North America’s third- largest insurer, gained 2.1 percent to C$12.64.
Raw-materials producers advanced as gold rebounded from yesterday’s 4.3 percent plunge and copper climbed on the Comex in New York.
Goldcorp Inc. (G), the world’s second-largest gold producer by market value, rose 2 percent to C$48.91. First Quantum Minerals Ltd. (FM), Canada’s second-biggest publicly traded copper producer, gained 3.5 percent to C$23.43 after China reported manufacturing growth accelerated last month. Ivanhoe Mines Ltd., Rio Tinto Group’s majority-owned partner in Mongolia’s Oyu Tolgoi project, rallied 5.5 percent to C$18.11.
China Gold International Resources Corp. tumbled 8.1 percent to C$3.98 as the metal fell 3.9 percent in Shanghai.
Bombardier sank 9.5 percent, the most since March 2009, to C$4.30 after reporting fourth-quarter sales that trailed the average analyst estimate in a Bloomberg survey by 9 percent. The company forecast a fifth straight annual decline in aircraft deliveries this year.
Timothy James, an analyst at TD, cut his rating on the shares to hold from buy. Cameron Doerksen of National Bank of Canada reduced his rating on Bombardier to sector perform from outperform, meaning the shares will perform in line with the industry over the next 12 months.
Oil and gas producers advanced as crude oil touched $110 a barrel in electronic trading in New York.
Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, increased 1.9 percent to C$37.41. Cenovus Energy Inc. (CVE), Canada’s fifth-biggest company in the industry by revenue, climbed 1.3 percent to C$38.95. Precision Drilling Corp. (PD), the country’s largest drilling company, rallied 5.2 percent to C$12.60.
Ithaca Energy soared 13 percent to C$3.20, the highest close since January 2008, after saying it has “received unsolicited interest from a number of third parties.” The company said Jan. 23 it had received a takeover proposal.
Research In Motion Ltd. (RIM) fell 4.9 percent to C$13.35 after Peter Misek, an analyst at Jefferies Group Inc., said the BlackBerry maker is likely to estimate quarterly earnings below the average analyst forecast. Misek cut his 12-month price estimate on RIM’s U.S.-traded shares to $12 from $15.
Calfrac Well Services Ltd. (CFW) advanced 8.7 percent to C$35.15 after Moody’s Investors Service raised its credit rating to Ba3 from B1. Ratings in the Ba category have “substantial” credit risk rather than “high” risk as in the B category. Terry Marshall, an analyst at Moody’s, cited higher spending by oil and gas producers as a reason for the upgrade in a note.
Calfrac shares have jumped 26 percent since Feb. 27 for the biggest three-day gain since March 2004.
Yoga-wear retailer Lululemon Athletica Inc. (LULU) increased 5.4 percent to a record C$69.86 after Jim Duffy, an analyst at Stifel Financial Corp., boosted his 12-month price forecast on its U.S. shares to $77 from $70. Stifel’s checks have found “positive consumer response to new styles and color palettes” as well as changes to Lululemon’s website, Duffy wrote in a note to clients. The company’s market value surpassed C$10 billion.
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