A significant number of Canadian companies are reporting earnings this week. Some of them are major, well-known Canadian corporations; others are smaller outfits. Among the companies reporting this week is last week’s biggest headline-maker, a green energy company that signed the biggest clean energy deal in history.
In this article, I will explore three Canadian companies I’m watching closely this earnings week, starting with the history-maker just mentioned.
Brookfield
Brookfield (TSX:BN) is the parent company of Brookfield Renewable Corporation, a company that just signed history’s biggest-ever clean energy deal with Microsoft. The deal will see Brookfield Renewable supply Microsoft with 10.5 gigawatts of green energy for its facilities in North America and Europe. Brookfield Renewable itself reported last week, but Brookfield’s release is still to come.
Brookfield Renewable’s Microsoft deal is very enticing. However, there is much more to Brookfield than just that. The company is also involved in insurance, asset management and real estate. It has many different partnerships that trade on the TSX and the New York Stock Exchange.
When Brookfield releases its earnings on May 9, investors will get to see how well the company’s many subsidiaries performed. Interest rates have been a concern for this company, as it (or, more accurately, its partially owned subsidiaries) has a lot of debt. So, investors will want to pay close attention to interest expenses in Brookfield’s earnings release.
Brookfield Asset Management
Brookfield Asset Management (TSX:BAM) is another Brookfield company. It reports on May 8. Brookfield Asset Management is the most profitable of all the Brookfield companies, with a 45% net income margin (i.e., profit generated per dollar of revenue).
There will be a lot to watch in Brookfield Asset Management’s upcoming release. First, we will get to see how much fee income the company generated in the second quarter. Second, we’ll get some indications as to how much interest the company’s funds are seeing. Third, we’ll get a host of operational updates that will tell a lot about how BAM is performing overall.
Unlike Brookfield Corp, BAM has almost no debt, so interest expense is not a concern here. On the whole, I’d expect good things.
Shopify
Last but not least we have Shopify (TSX:SHOP), Canada’s very own unicorn tech company. Shopify is known for its rapid historical growth, which has slowed down somewhat in recent years. Investors expect the company to grow its revenue by high percentages when it reports its earnings on May 8. If revenue and earnings growth slow down, the company’s stock could take a beating.
Shopify has a lot of things going for it. It has a high market share, making it the dominant e-commerce shopping cart company in the world. It has a relatively low-fee model compared to some of its alternatives, making it attractive to vendors. Finally, it recently became free cash flow positive after years of not being profitable, which points to the possibility of a prosperous future. Shopify is Canada’s best-known technology stock for a reason. With rapid growth and newfound profitability, it gives investors a lot to be excited about.
