August 9, 2019
Never a dull day in the markets it seems…
S&P 500 was up 1.9% and Toronto was up 0.9%.
Shopify was up 4.3%.
Boston Pizza Royalties Income Fund reported earnings before the open. Same-store sales subject to the franchise fee (excludes alcohol) were basically flat (down 0.3%). Distributable cash per unit was basically flat (up 0.1% helped out by some unit buy backs in December). Trailing 12 month payout ratio remains of concern at 103.3%. So, basically they are treading water. They indicate optimism that same-store sales can grow with advertising and menu price increases. I worry that they may have to cut the distribution a little. The yield at almost 8% remains attractive especially as interest rates are falling once again.
Stantec was down 4.7% for the reasons I mentioned yesterday.
Canadian Tire reported earnings before the open with normalized earnings per share up 13.7% and same-store sales growth of a respectable 2.2%. … and the stock fell 4.8%. The reason for the decline was likely their announcement that they will acquire the 65 store chain Party City for $174 million. I don’t know why the market would react so negatively to this. Canadian Tire now has a very good history of acquiring other chains successfully (Primarily Mark’s and the former Forzani sports stores). If I had sufficient cash, I would have bought more Canadian Tire shares today. I did in fact buy a few in an account I manage for a relative.
AutoCanada reported earnings after the close. They tout a lot of improvements but there was still a net loss and so we shall see how the analysts and the market react tomorrow.
Also, after the close, Linamar reported earnings. They tout good cash flow and improved market share but earnings (not unexpectedly) are down versus last year but still nicely positive. Again, we shall see how the market reacts.
Restaurant Brands announced that a major share holder, (presumably its controlling owner) will sell 20 million shares in a public offering. i suspect that this means the share price will decline on Friday.
I plan to go through the various earnings reports and update several of the reports in the next week or so.