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WHAT'S ON TAP
Small business sentiment hits all-time low
PPI data stokes inflation concerns
Snap election coming soon
Is it time to buy Shopify?
Magellan Aerospace & AutoCanada jump 10% on the day
Hammond Power reported strong Q4 results
March Madness Memes
TRADE WAR MONITOR
Nothing notable on the trade front… which might not be a good sign. If countries don’t budge soon, we could be nearing phase 2 of our trade war framework: adjustment & strategy shifts.
The uncertainty is crushing small business sentiment, which now sits at the lowest point on record.
Our framework for navigating the trade war: https://www.bullpen.finance/content/51
HOT OFF THE PRESS
Input-output PPI signals more inflation
We got inflation data on raw materials and industrial products yesterday, which inched higher M/M by 0.3% and 0.4%, respectively. On a Y/Y basis prices remain elevated, up 9.3% and 4.9%.
Excluding energy products, raw material prices jumped 3.4% M/M and 16.2% Y/Y, driven by items like metals, cattle and crops.
Bottom line: until we see some relief on the inputs, the setup here is for persistent inflation.
Snap election looks to be coming in April
Carney is expected to call a snap election this Sunday for the end of April, as the Liberal party looks to take advantage of a change in political sentiment following Trudeau’s departure.
Though the odds appear to have swung in favour of the Liberals, we’re starting to do some work to understand the impact of a leadership change on markets.
Is it time to buy Shopify? We break it down
We’re doing some deeper work on Canadian companies to help you understand the story behind the stock, and what better place to start than Shopify (SHOP) - a Canadian portfolio staple.
If you own SHOP or are considering it, this is a must read - if not, you should still check it out. Given its size, Shopify is heavily weighted in most Canadian indices - so how it trades impacts how the broader market trades.
Check it out below and if you like it, share it with a colleague!
If the above link won’t work, try this: https://www.bullpen.finance/content/66
FUNNY BUSINESS
Sorry in advance for the March Madness Memes… whose bracket is still in tact?
ON OUR RADAR
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GAINERS & LOSERS
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Magellan Aerospace (MAL) continues to run after its earnings report, up 10%. The company is executing well and is expanding its global footprint, signing a partnership with India’s Aequs to build a sand-casting facility.
AutoCanada (ACQ) was up nearly 10% on the back of a solid earnings print, where it missed on revenue but beat big on profit, with EBITDA of 54M crushing estimates of 36M. Management guidance makes it seem likely to continue, with a $100M cost savings plan to be implemented during the year.
INSIDER TRANSACTIONS
| Insider | Company | Value |
|---|---|---|
| Norman Keevil | Teck Resources (TECK) | $6.2M |
| Sime Armoyan | Knight Thera (GUD) | $8.1M |
| Brian Bradstreet | Fairfax (FFH) | $2.0M |
| Jessica Kirstine | TC Energy (TRP) | $1.9M |
| Jawad Masud | TC Energy (TRP) | $2.4M |
EARNINGS
YESTERDAY’S EARNINGS
| Company | Actual | Consensus |
|---|---|---|
| 🇨🇦 Knight Thera (GUD) | 0.11 | 0.01 |
| 🇨🇦 Bragg Gaming (BRAG) | -654K | -600K |
| 🇨🇦 NA Construction (NOA) | 1.00 | 1.11 |
| 🇨🇦 Enterprise Group (E) | 0.01 | 0.02 |
| 🇨🇦 Orezone Gold (ORE) | 0.09 | 0.08 |
| 🇨🇦 K-Bro Linen (KBL) | 0.34 | 0.42 |
| 🇨🇦 Hammond Power (HPS-A) | 1.99 | 1.80 |
| 🇨🇦 Canacol Energy (CNE) | (1.08) | 1.14 |
| 🇺🇸 Micron (MU) | 1.56 | 1.42 |
| 🇺🇸 Nike (NKE) | 0.54 | 0.29 |
| 🇺🇸 FedEx (FDX) | 4.51 | 4.63 |
Hammond Power Solutions (HPS-A) reported strong Q4 results:
Top-line: record revenue of $208M beat the street at $203M, with Y/Y growth accelerating to 11.5%, from 6.9% in Q3 (with some help from M&A).
Bottom-line: Reported EPS of $1.99 versus estimates of $1.80, up 12.5% Y/Y.
The company said it should have $1.1B in revenue capacity by the end of its CapEx program in 2025. Looks good versus street forecasts of $960M, though it could take time to ramp the facility up to full capacity. We highlighted HPS now trades below its long-term average valuation in our recent data center note.
North American Construction (NOA) showed mixed results, with margin improvement:
Top-line: reported Q4 combined revenue of $373M, down from $405M last year driven by lower demand for equipment.
Bottom-line: Despite lower revenue, Q4 adjusted EBITDA increased to $104M with margins improving to 27.8% (vs. 24.9%), while Q4 adjusted EPS rose to $1.00 from $0.87 (but still missed estimates).
The company secured several major contracts during the quarter, including a $500M extended services contract in the oil sands region and a $100M early works contract in Australia. NOA also gave a positive 2025 outlook with projected adj. EPS of $4.15-4.45.
TODAY’S EARNINGS
| Company | Time | Consensus |
|---|---|---|
| 🇨🇦 dentalcorp (DNTL) | AM | 0.12 |
| 🇨🇦 Premium Brands (PBH) | AM | 0.95 |
After Premium Brands (PBH) reports, we’ll come out with an earnings recap on consumer staples - watch for it in your inbox next week!
ECONOMIC DATA
YESTERDAY’S ECONOMIC RELEASES
| Release | Actual | Consensus |
|---|---|---|
| 🇨🇦 PPI M/M | 0.4% | 0.3% |
| 🇨🇦 PPI Y/Y | 4.9% | - |
| 🇨🇦 Raw Materials M/M | 0.3% | -0.3% |
| 🇨🇦 Raw Materials Y/Y | 9.3% | - |
| 🇺🇸 Jobless Claims | 223K | 224K |
| 🇺🇸 Fed Mftg. Index | 12.5 | 8.5 |
| 🇺🇸 Existing Home Sales | 4.26M | 3.95M |
TODAY’S ECONOMIC RELEASES
| Release | Time | Consensus |
|---|---|---|
| 🇨🇦 New Home Index M/M | 7:30AM | 0.0% |
| 🇨🇦 Retail Sales M/M | 7:30AM | -0.4% |
| 🇨🇦 Retail Sales Ex-Auto M/M | 7:30AM | -0.2% |
