stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
Analysts look to earnings to calm markets' choppy waters
space
space
By DAVID BERMAN
  
  

Email this article Print this article
Monday, October 22, 2018 – Page B2

Analysts are expecting double-digit profit growth as Canadian companies prepare to report their third-quarter financial results over the next two weeks. Will strong corporate earnings help soothe a stock market rattled by trade tariffs and rising borrowing costs?

U.S. and Canadian stocks have been unusually volatile this month. The Dow Jones Industrial Average has moved more than 100 points for nine of the past 15 trading days, including an 830-point slide on Oct. 10.

Canada's S&P/TSX Composite Index is also turbulent. The index has fallen a total of 735 points since the end of September, leaving it down 4.5 per cent for the year.

The volatility comes as China and the United States continue to squabble over trade, raising concerns about the global economy.

"If global supply chains are disrupted, we would also expect higher inflation and even higher interest rates," Ian de Verteuil, an analyst at CIBC World Markets, said in a note.

Indeed, U.S. bond yields are near sevenyear highs. Investors are also looking with some apprehension at rising Italian bond yields, which are signalling concerns about government debt, and the foreign policy crisis that is developing between the United States and Saudi Arabia.

The hope is that strong corporate profits will help calm the stock market.

In the United States, companies have been reporting stellar third-quarter profits so far. According to I/B/E/S data from Refinitiv, the S&P 500 is on track to show profit growth of 22 per cent over last year; more than 78 per cent of companies have beaten analysts' expectations.

Now, TSX heavyweights such as Canadian National Railway Co., Barrick Gold Corp., Shopify Inc., Enbridge Inc., Fortis Inc., Air Canada and Suncor Inc. are set to report their quarterly results, giving investors a sense of whether Canadian corporate profits will measure up.

Canadian results aren't being juiced by recent U.S. tax cuts, so expectations are more muted. Nonetheless, Refinitiv estimates companies in the S&P/TSX Composite Index will report earnings growth of 10.4 per cent, year-over-year.

Analysts are particularly upbeat about energy stocks. Earnings growth is pegged at 21.4 per cent, year-overyear, which is the strongest estimate for any sector in the TSX.

The optimism comes at a difficult time for the sector, though. Export bottlenecks owing to tight pipeline capacity has been hammering the price of Western Canadian Select crude (WCS), a Canadian benchmark, which has weighed on energy stocks.

But some analysts believe large, diversified companies can ride out the challenging environment, which makes Suncor a key company to watch when it reports its results on Oct. 31. According to Bloomberg, analysts expect Suncor will report a 77-per-cent improvement in its year-over-year adjusted earnings.

"Given the company's status as a toptier operator, and most profitable Canadian refiner, we are perplexed as to the company's relative underperformance as of late and believe that current equity price levels present a strong entry point for investors," Nicholas Lupick, an analyst at AltaCorp Capital Inc., said in a note.

The outlook for industrials is not as bright. Over all, analysts expect the sector will see a 3.5-per-cent decline in earnings.

Analysts estimate Air Canada will report a profit of $2.13 a share, down from $3.34 a share last year, according to Bloomberg.

Investors, however, should keep in mind that the airline has exceeded analysts' estimates for nine straight quarters.

And analysts expect Air Canada should be able to overcome rising jet fuel prices thanks to high demand for tickets.

"We are seeing preliminary data pointing to strong traffic growth this quarter," Walter Spracklin, an analyst at RBC Dominion Securities Inc., said in a note. "We remain confident in Air Canada's ability to pass on higher fuel prices."

The railways are also benefiting from strong demand and pricing power. Canadian Pacific Railway Ltd. reported a 42-per-cent increase in its quarterly profit, per share, when it released its results last week, essentially shrugging off recent trade tensions between the United States and Canada.

CN will report its third-quarter results on Oct. 23. Analysts expect to see the railway report a profit of $1.47 a share, after adjustments, up 12 per cent from last year, according to Bloomberg - although what the railway says about expansion may be just as important as the bottom line.

"CN's progress on its infrastructure projects will be a key item to monitor in its third quarter results. Additional capacity is needed to grow volumes and ensure adequate network resiliency to avoid service issues this winter," Benoit Poirier, an analyst at Desjardins Securities, said in a note.


Huh? How did I get here?
Return to Main William_Houston Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page