Disclosure: Bullpen receives compensation from VersaBank for research coverage. VersaBank is also an IR client of LodeRock Advisors, an affiliate of Bullpen.
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WHAT'S ON TAP
HOT OFF THE PRESS
Manufacturing sales to rebound 4%
Preliminary estimates for February are calling for a 3.8% rise in manufacturing sales, the largest gain in four years…
… led by a recovery in transportation equipment, which was the main driver of last month’s drawdown - as production lines retooled for new vehicle models.
Boralex weighs go-private transaction
Boralex (BLX) is up nearly 20% this week on news the company was exploring a potential go-private deal, roughly one year after Innergex (INE) was taken out for ~$10B. Using the same ~12x multiple it went for…
… would represent ~20% upside, which could have more juice given the relative stability of Boralex’s wind-heavy portfolio. That’s worked against it lately…
… with renewable IPPs falling out of favour as investors pile into gas names, who sit closer to the data center thematic.
But cash flow is cash flow, and CDPQ (15% owner) could recycle the Innergex playbook - consolidating two Quebec-heavy power producers.
VERSABANK
VersaBank (VBNK) announced the sale of its only retail location, after picking it up in a deal that gave the company access to the US market…
… where it’s now scaling its branchless B2B strategy. At close, the bank expects a US$1.7M non-cash write off (goodwill) and a further improvement in US segment efficiency…
… though continued growth in the SRP program should be the main driver of operating leverage, with US$200M of funding in Q1 and management reiterating its US$1B target for the year.
ON OUR RADAR
GAINERS & LOSERS
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Dollarama (DOL) dropped 10% on its Q4 results, which edged out estimates but came with guidance for soft same-store growth and flat margins…
… driven by a weak macro backdrop and geopolitical uncertainty. Not a bad print by any means, but when you’re trading at ~35x NTM EPS…
… a modest guide is going to take some air out of the multiple, partly driven by investors anticipating reductions to estimates and price targets.
goeasy (GSY) was up small after announcing amendments to its financing agreements, including a 100 bps rise in interest rates…
… and $300M reduction to the securitized warehouse facility.
Importantly, the LendCare business (source of the blowup) is no longer considered good money by lenders - who have deemed it ineligible as collateral…
… which should dramatically slow origination activity. With covenants waved in Q4 and $240M of immediate liquidity, GSY looks to have escaped forced dilution for now - but bringing investors back will be no quick fix.
INSIDER TRANSACTIONS
| Insider | Company | Value |
|---|---|---|
| Scott Ratushny | Cardinal (CJ) | $1.8M |
| Gregory Romero | TC Energy (TRP) | $460K |
| Jennifer Traub | Denison (DML) | $360K |
EARNINGS
YESTERDAY’S EARNINGS
| Company | Actual | Consensus |
|---|---|---|
| 🇨🇦 Dollarama (DOL) | 1.43 | 1.40 |
| 🇨🇦 Ag Growth (AFN) | 48M | 63M |
TODAY’S EARNINGS
| Company | Time | Consensus |
|---|---|---|
| 🇨🇦 Pizza Pizza (PZA) | AM | 0.24 |
| 🇨🇦 goeasy (GSY) | PM | -8.30 |
| 🇨🇦 Anaergia (ANRG) | PM | 0.01 |
ECONOMIC DATA
TODAY’S ECONOMIC RELEASES
| Release | Time | Consensus |
|---|---|---|
| 🇺🇸 Export Prices M/M | 7:30AM | 0.5% |
| 🇺🇸 Import Prices M/M | 7:30AM | 0.5% |
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