Research Alerts

Q4/11: FirstService had a strong Q4 with revenues, adjusted EBITDA and adjusted EPS rising 8%, 20% and 41% respectively. Commercial Real Estate was the main source of the Q4 performance. Adjusted EPS for the quarter rose to $0.52 from $0.37, which took the total for the year to $1.81 from $1.61. This was in line with expectations.

Commercial Real Estate (CRE): Reflecting a strong performance in North America adjusted EBITDA in this division rose 75% in Q4 to $29.2 million from $16.8. This was a record quarterly earnings for CRE as was the annual value of $51.9 million. The outlook is for continued improvement in 2012 particularly in the U.S. where an improving economy has provided a healthy order backlog at this time. Growth in both Asia/Pacific and Europe is expected to be more subdued.


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Molson Coors Brewing Company reported a solid Q4 with EPS rising to $0.97 versus $0.66 last year on a 12.2% increase in revenues to $937.3 million. The EPS figure was significantly ahead of Street expectations of $0.70. For the year, EPS came in at $3.76 versus $3.56 on an 8.0% increase in revenues to $3.5 billion. Strength in the fourth quarter was driven by positive pricing, cost reduction initiatives, the cycling of a particularly weak quarter last year, an additional week in the quarter and a significantly lower tax rate (5.0% versus 11.3%).

The impact of the 53rd week is made clear when worldwide volumes and profits are examined. The extra seven days accounted for 300,000 hectoliters of volume and $9.0 million in pre-tax profit (5%). The 2.6% increase in worldwide volume in the quarter actually falls to a decline of 0.1% when the extra week is excluded.


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CCO reported strong Q4 results which capped a very up-and-down year for the company. Q4 EPS came in at $0.63 which was up 34% and well ahead of consensus of $0.47. The company beat on higher than expected contracted sales and higher than expected realized prices (after hedging).

For the year, EPS was $1.14 vs. $1.30. Total production was 22.4 million lbs which was a 2% drop over 2010. The company saw 9% higher pricing after hedging which was offset by 9.5% higher operating costs and a 17% drop in earnings from its Fuel Services division.


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TRP reported Q4 results this week that were in line with consensus. EPS of $0.52 dropped $0.03 over the same period last year due to warm weather which negatively impacted gas storage revenue, incentive tolls on natural gas pipes and power prices in the US.

The Board approved a 5% increase in the divided to $1.76. This was below our 7% forecast but we had been on the high-end of the Street. TRP likely backed-off a higher increase due to the uncertainty over Keystone XL (KXL). We believe TRP has a greater capacity for dividend growth than 5%/year as its cash flow growth will outpace earnings over the coming years.


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Telus reported mixed Q4 2011 financial results but strong underlying metrics. Revenue grew 5.3% Y/Y to $2.69 billion (consensus: $2.69 billion), while EBITDA rose 3.9% Y/Y to $874 million. EBITDA was somewhat lower than the consensus estimate of $890 million due to higher upfront subsidy costs associated with stronger than expected new wireless subscriber additions. Adjusted EPS of $0.75 versus $0.67 a year ago fell short of Street expectations of $0.78. This shortfall resulted from lower EBITDA along with higher amortization expenses.



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The company reported fourth quarter 2011 adjusted earnings of $1.04 per share versus last year’s (2010) earnings of $0.87 a share and consensus earnings forecast by analysts of $1.07. This marks the end of a successful year for the company as they reported record revenues, gross profit, profit and cash flow. In addition, the company increased its dividend in October by 33% to $0.80 per annum and purchased 5.3 million shares for cancellation.


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Shoppers completed 2011 in a mildly positive manner with net earnings in Q4 rising 4.2% to $176 million. Q4 EPS amounted to $0.82 vs. $0.78, which was in line with expectations. Adjusted EPS for the year rose 2.9% to $2.82 from $2.74 with strength in front store operations and fewer shares offsetting reduced profitability in the prescription business.


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Q4 2011: Despite the absence of normal weather, Canadian Tire reported a solid Q4 with adjusted EPS up 43% ($2.03 vs. $1.40). This reflected a significant contribution from FGL Sports and a strong performance in Financial Services. On an adjusted basis, EPS for the year rose 17% to $5.54 from $4.77. The growth was largely from the acquisition of The Forzani Group.


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Cisco reported better than expected Q2 f2012 results with revenue rising 10.8% Y/Y to $11.53 billion, ahead of Street estimates of $11.23 billion. Adjusted EPS of $0.47 (+27.0% Y/Y) was also ahead of analysts’ forecasts of $0.43, driven by higher revenue and better than expected gross and operating margin.

Cisco announced a $0.02 increase to their quarterly dividend (+33.3%), which now rises to $0.08 from $0.06, or to $0.32 from $0.24 on an annualized basis.


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The company reported earnings from continuing operations of $327 million or $2.04 for the fourth quarter that included a write-down of their investment in Hanfeng Evergreen Inc. (HF-TSX) (more later) that reduced earnings by $0.30 a share. Adding back this one time item the earnings came in at $2.34 versus last year of $0.97 a share. The consensus earnings for the fourth quarter by analysts were $2.01. The company had a low tax rate of 23% versus last year of 29%. If we adjust for this using last year’s tax rate the earnings per share came in at $2.18. For the full year the company reported earnings of $9.52 a share versus $4.62 last year.


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Absolute Software reported its strongest-ever contract sales for the second quarter at $20.7 million, up 17.0% Y/Y, beating Street estimates that were in the $20.3 million range.  Cash flow growth was also very impressive at $6.0 million, rising 87.5% Y/Y and ahead of Street forecasts of $4.3 million. Cash flow growth was driven by a combination of higher contract sales and solid expense management. Operating expenses accounted for 74.9% of contract sales in Q2 versus 90.4% a year ago, despite headcount remaining relatively flat Y/Y. With most of the costs associated with the company’s product and geographic expansion efforts behind them, a substantially larger proportion of sales growth now goes directly to the bottom line.



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RDS announced Q4 results that missed consensus by roughly 5%. Net income was $4.85 billion vs. consensus of $5.1 billion. Results were hurt by weak refining margins that offset decent results from the upstream. Refining margins were down in most global markets in the fourth quarter but have rallied strongly in Q1 thanks to a number of refinery closures.


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Chartwell Seniors Housing REIT is one of the largest participants in the seniors housing business in North America. It owns and operates seniors housing communities ranging from independent supportive living to assisted living to long-term care. It operates over 25,000 suites located in key markets throughout North America (approximately ¾ in Canada and the rest in the U.S.).

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Q1 2012: Metro started fiscal 2012 with a strong Q1. Net earnings rose 8.6% to $103.7 million or to $1.01 per share from $0.91. Results for both years are under IFRS accounting with the Q1 2011 results being restated upwards by $0.03 per share. EPS were slightly above expectations. The quarterly dividend was raised 11.7% to $0.215 per share.


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Dundee International REIT allows investors to participate in the growth of international commercial real estate and diversify their real estate holdings all the while remaining within the Canadian tax advantaged REIT structure. Currently, the company’s assets are exclusively in Germany and consist of over 290 properties for a total of 12.3 million square feet.


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Apple reported extremely strong Q1 f2012 results with nearly all metrics well above Street estimates. Revenue of $46.3 billion grew 73.3% Y/Y beating consensus estimates of $38.9 billion. EPS of $13.87 rose 115.7% Y/Y, also widely ahead of Street forecasts of $10.08.  Gross margin of 44.7% hit an all-time high for the company and easily beat both Street estimates and management’s guidance. The large 620 bps Y/Y expansion in gross margin was largely the result of a shift in product mix towards iPhones, although favourable component and other product costs were also a factor. Management expects the favourable component pricing environment to continue throughout Q2, although gross margin is guided lower Q/Q on a higher U.S. dollar and seasonally weaker iPhone sales.

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Despite market uneasiness centered on the potential impact that lower PC growth could have on Microsoft going into the quarter, the company reported Q2 f2012 results in line with Street expectations.  Revenue of $20.9 billion (+4.7% Y/Y) was dead-on analysts' consensus forecasts, while EPS of $0.78 (+1.3% Y/Y) beat Street expectations by $0.02.


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