The S&P/TSX Composite Index could carry over its recovery momentum witnessed during Wednesday’s trading into Thursday. Futures contracts on the TSX Composite point to a strong positive open on North American stock exchanges today, and the thawing investor moods could spill over onto the TSX, too.
Yesterday’s 0.26% recovery from Tuesday’s three-month low was a welcome relief. However, any weakness that may happen during Thursday trading on the TSX today should distract investors’ long-term view that stocks offer the best chance for a robust retirement than most other asset classes available today. Historically, short-lived bear markets have usually given way to sustained bull markets 100% of the time.
The first-quarter earnings season has gained momentum with more than 80 TSX-listed companies scheduled to release their quarterly earnings today.
Wednesday TSX trading recap
The S&P/TSX Composite Index gained 53.4 points to close up 0.26% at 20,744.23 on Wednesday — a small recovery from a three-month low reached on Tuesday’s close. Energy powered the index’s recovery with a 3.4% gain, while base metals’ 4.5% rise and industrials’ 0.32% ascent were enough to dilute selling pressure on financials, health care, information technology, and telecoms.
Although oil prices weakened slightly and the West Texas Intermediate (WTI) oil barrel closed at US$101.18, energy stocks rallied on Wednesday after Cenovus Energy’s surprise earnings, tripled dividend, and a subsequent 10.3% rally attracted more money into TSX energy stocks yesterday.
Latest earnings news that could move the TSX today
Four notable earnings reports were released before the TSX stock markets opened today.
AltaGas released first-quarter earnings
After what is called a strong 2021, AltaGas (TSX: ALA) had to carry over positive earnings momentum into 2022, and the gas utilities and midstream business did not disappoint.
First-quarter revenue of $3.89 billion was 26% higher than last year’s comparable quarter. ALA stock’s diluted net earnings per share (EPS) of $1.01 was a 22% decline from a year ago, but a normalized EPS of $1.26 showed a 5% improvement year over year.
AltaGas reiterated its guidance for 2022 for normalized EPS of $1.80-1.95 and normalized EBITDA guidance for $1.5-1.55 billion, both of which would show sequential growth over 2021 financial results.
The company will hold its annual shareholders’ meeting via video webcast tomorrow, Friday, April 29, 2022, at 3:00 p.m. ET.
Precision Drilling
Going into Thursday’s earnings, oil and gas field services leader Precision Drilling (TSX: PD)(NYSE: PDS) had a tough assignment to justify a 94% rally in its stock price so far this year.
Precision Drilling reported first-quarter revenue of $351 million, a 49% year-over-year growth, and generated a $44 million net loss ($3.25 per share). Analysts had projected a $330 million revenue and a $30 million loss ($1.37 per share) for the quarter. Therefore, PD beat on revenue and missed on earnings in the latest earnings report released before markets opened on Thursday.
Revenue growth was supported by U.S. and Canadian drilling activity growth of 56% and 48%, respectively, as the company strengthened its contracts book with 27 new term contracts this year and increased day rates by 10-15% — better than general inflation rates in Canada.
The market expected PD to deliver growing earnings on higher revenues, as the energy industry rides a commodity supercycle, and oil companies harvest ample cash flow to spend on well expansion projects.
Real Matters stock could extend losses
Mortgages appraisal and Canadian mortgage network management services firm Real Matters (TSX: REAL) reported consolidated net revenues of US$24.2 million (a 48.2% year-over-year decline), a net loss of $0.5 million, and adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) of US$2.5 million (an 86.8% year-over-year weakness) for its fiscal second quarter 2022, which closed in March.
Wall Street analysts had projected a net revenue decline to US$33 million and positive earnings per share of US$0.04.
Sharp increases in mortgage rates in the U.S. and Canada are wreaking havoc in the company’s mortgage appraisal business. Management plans to buy the dip on REAL stock through an increased share-repurchase program.
Notable upcoming earnings to watch on the TSX today
Agnico Eagle Mines will release its first-quarter earnings results after markets close on Thursday. Analysts expect the Canadian gold miner to report US$1.25 billion revenue, or a 34% growth year over year. However, a projected GAAP EPS of $0.32 could show a 43% weakness in earnings if confirmed today.
