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Weekly Equities Update

Author: Fahad Salman Research Analyst


Summary

Over the past week, we have seen equities rising in value, with a lot of the gains coming from energy and financial sectors.

Gains in the energy sector are in-line with the rising oil prices caused by the United States withdrawing from the Iran Nuclear Deal. Oil futures have been rising due to the increased sanctions that will be reinstated in a few months.

The financial sector has been quite volatile lately as it has been reacting to the changes in yields caused by the rate hike that has been implemented by the Bank of Canada so far in 2018, along with the multiple rate hikes in 2017. They have been bullish as investors anticipate favourable financial results in the long-term. Canadian banks continue to remain investor favourites due to their consistent ROE, dividend yield, and government backing. U.S. banks are also expected to see less regulation going forward as newly appointed regulators are seen as “pro-growth” and “pro-business,” which would lower costs and increase profitability.


Earnings Season


Great Canadian Gaming Corporation (GC:TSX) is up 38% week-over-week after its reporting its Q1 financials and completing the acquisition of West GTA Bundle with Clairvest Group earlier this month. GC is a $2.88B company in the gaming industry with operations in gaming, entertainment, and hospitality facilities that provide clients with access to casinos, racetracks, resorts, and hotels. Q1 results reported Y/Y revenue growth of 62% to $230.5MM and EPS growth of 66% to $0.48 basic.

George Weston (WN:TSX) also announced their Q1 earnings this past week and are up 0.33%. WN is a $13.42B company in the food retail industry, engaging in food processing and distribution both domestically and internationally. Loblaw Companies is a subsidiary of George Weston, which includes names such as Loblaws, Freshmart, SuperValu, Shoppers Drug Mart, and Zehrs. According to management guidance, adjusted EPS dropped approximately 3.2% year over year while revenue dropped 0.5% YoY. While earnings came down, they increased their quarterly common share dividend by 7.7%. While this increased yield could seem attractive for investors, it might not be a good sign for the business as it shows the company isn’t able to provide more value to investors by investing the funds.


TripAdvisor (TRIP:NASDAQ) is up over 26% week over week after reporting its Q1 financial results. TripAdvisor is an online travel company that operates in two segments: Hotel and Non-Hotels (i.e., experiences/attractions and restaurants) and has a travel platform which aggregates reviews and opinions of members about their experiences, enabling users to better research and plan their travel experiences. Their website operates in 48 markets and 28 languages, featuring over 600 million reviews and opinions on 7.5 million places. TRIP announced non-hotel revenue growth of 36%, hotel revenue decrease of 5%, and total sales growth of 2%, with their adjusted, non-GAAP net earnings growing 20% YoY. Some business drivers also had great growth, with user reviews growing 26% to 630 million total reviews and average monthly unique visitors growing 12% to 43.3 million.



Sources: Questrade IQ Edge, S&P Capital IQ

Sources: Questrade IQ Edge, S&P Capital IQ

The above information does not constitute the provision of investment, legalor tax advice. Any views expressed reflect the current views of the authors, which do not necessarily correspond to the opinions of University of Waterloo Finance Association (“UWFA”). Opinions expressed may change without notice. Opinions expressed may differ from views set out in other documents, including research, published by UWFA. The above information is provided for informational purposes only and without any obligation, whether contractual or otherwise. No warranty or representation is made as to the correctness, completeness and accuracy of the information given or the assessments made.

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