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TSX Flat Amid Mixed Earnings, Spain Downgrade - Canadian Commentary

4/27/2012 11:30 AM ET

Toronto stocks were struggling for direction Friday morning amid a mixed batch of earnings reports from Canadian companies. Also, worries over the euro zone debt situation escalated after S&P downgraded Spain's sovereign rating on concerns that the nation will have to provide further fiscal support to the banking sector as the economy contracts.

The S&P/TSX Composite Index edged up 16.53 points or 0.14 percent to 12,162.38, after gaining nearly 170 points or 1.40 percent in the past two sessions. The price of crude oil slipped Friday morning as traders worried over demand growth from the euro zone after Spain's sovereign rating was trimmed by S&P. Crude for June edged down $0.15 to $104.40 a barrel.

In the oil patch, Cenovus Energy (CVE.TO) and Vermilion Energy (VET.TO) rose around 2 percent each.

Energy sector business solutions provider Canadian Utilities (CU.TO) added 0.50 percent after reporting improved first quarter earnings of C$193 million or C$1.45 per share versus C$176 million or C$1.34 per share last year. Analysts were expecting the company to report earnings of C$1.37 per share this quarter.

International oil and gas company Petrominerales (PMG.TO) dived nearly 15 percent after providing operational update at its Deep Llanos Basin, Colombia

Crude oil and gas transportation company TransCanada Corp. (TRP.TO) eased 0.50 percent after posting lower first-quarter comparable earnings of C$363 million or C$0.52 per share versus C$423 million or C$0.61 per share for the same period in 2011. Analysts expected the company to report earnings of C$0.54 per share

Independent power producer Capital Power Corp. (CPX.TO) gathered over 1 percent after posting a rise in first quarter profit to C$40 million or C$0.64 per share versus C$3 million or C$0.05 per share a year ago. Normalized earnings per share were C$0.46 versus C$0.34 in the same quarter a year ago. Analysts expected the company to report earnings of C$0.34 per share

The price of gold was ticking higher as the US dollar was moving lower versus a basket of currencies. Gold for June was up $4.40 to $1,664.90 an ounce.

Among gold stocks, Agnico-Eagle Mines (AEM.TO) surged over 8 percent after reporting first-quarter net income of $78.5 million or $0.46 per share up from $45.3 million or $0.26 per share in the year ago quarter. Excluding these items, adjusted net income for the latest-quarter was $101.4 million or $0.59 per share. Analysts were expecting the company to report earnings of C$0.37 per share this quarter.

Detour Gold (DGC.TO) gained close to 3 percent.

Iamgold (IMG.TO) slipped 1.50 percent after announcing that it would acquire Trelawney Mining and Exploration Inc. (TRR.V), junior mining and exploration company, for $3.30 cash for each share. Shares of Trelawney surged over 40 percent to C$3.28.

Base-metals miner Inmet Mining Corp. (IMN.TO) gained over 5 percent after reporting first quarter net income of C$96.14 million or C$1.39 per share, up from C$59.41 million or C$0.97 per share in the prior year quarter.

Transportation and logistics services TransForce Inc. (TFI.TO) edged up 0.30 percent after reporting a much improved first-quarter net income of C$30.2 million or C$0.31 per share compared to C$14.9 million or C$0.15 per share in the year ago quarter. Adjusted net income rose to C$24.7 million or C$0.25 per share from C$9.3 million or C$0.09 per share. Analysts were expecting the company to report earnings of C$0.26 per share this quarter.

Entertainment technology company IMAX Corp. (IMX.TO) swung to profit in first quarter 2012, reporting net income of $2.6 million or $0.04 per share as against a loss of $1.0 million or $0.02 per share a year ago. Adjusted net income was $4.0 million or $0.06 per share higher than $2.5 million or $0.04 per share last year. Analysts were expecting the company to report earnings of C$0.07 per share this quarter. The stock dived over 6 percent.

In economic mews from south of the border, the U.S. Commerce Department's initial estimate of growth in the economy showed a 2.2 percent growth rate, down from the 3 percent growth posted for the final quarter of 2011. Most economists had expected the growth in the economy to drop from the 3 percent rate in the fourth quarter of 2011 though many forecast a somewhat stronger 2.5 percent growth rate.

From the euro zone, German consumer sentiment is set to deteriorate next month, a survey by market research group GfK showed. The forward-looking consumer confidence index dropped to 5.6 in May from a revised value of 5.8 in April. Economists were expecting a level of 5.9.

Earlier today, rating agency Standard & Poor's cut Spain's sovereign credit rating to BBB+ from A on concerns that the nation will have to provide further fiscal support to the banking sector as the economy contracts.

by RTT Staff Writer

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