maple leaf foods
Toronto symbol MFI, is Canada’s largest food processing company. Its products include fresh and prepared meats and poultry, mostly under the Maple Leaf and Schneider brands. It also makes fresh and frozen bakery products through 89.8%-owned Canada Bread Co. Ltd.
Maple Leaf Foods is nearing the end of its multi-year plan to unload less profitable businesses and modernize its meat-processing plants. The plan’s costs have depressed the company’s earnings, but it greatly improves its prospects. We also have a high opinion of Saputo (see box), but its growth relies on buying dairy producers in other countries, which adds risk. MAPLE LEAF FOODS INC. $19 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 142.1 million; Market cap: $2.7 billion; Price-to-sales ratio: 0.7; Dividend yield: 0.8%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest food processing company. It mainly sells its products, including fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands....
TIM HORTONS INC., $88.38, Toronto symbol THI, still plans to merge with Miami-based Burger King Worldwide (New York symbol BKW), even though the U.S. government is now clamping down on “tax inversion” deals like this one. The combined firm will be based in Oakville, Ontario, which will let it take advantage of Canada’s 15% corporate tax rate, compared to 35% in the U.S. Under the new rules, it’s now more difficult for the foreign parent firm to shift funds between subsidiaries....
MAPLE LEAF FOODS INC. $20 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 141.9 million; Market cap: $2.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 0.8%; TSINetwork Rating: Average; www.mapleleaf.ca) ships only a small portion of its pork products to Russia, so that country’s recent ban on food imports from Canada will have little effect on its sales and earnings.
Pork prices have moved up recently, because a virus has cut hog supplies. As a result, consumers have shifted to beef and other meats. However, the Russian pork ban could cut prices in Canada, which would help spur demand for Maple Leaf’s products.
Meanwhile, Maple Leaf’s sales rose 9.6% in the three months ended June 30, 2014, to $831.8 million from $759.3 million a year earlier, as higher selling prices offset lower volumes. The company continues to restructure, including closing older plants. Its loss narrowed to $0.13 a share from $0.25.
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Pork prices have moved up recently, because a virus has cut hog supplies. As a result, consumers have shifted to beef and other meats. However, the Russian pork ban could cut prices in Canada, which would help spur demand for Maple Leaf’s products.
Meanwhile, Maple Leaf’s sales rose 9.6% in the three months ended June 30, 2014, to $831.8 million from $759.3 million a year earlier, as higher selling prices offset lower volumes. The company continues to restructure, including closing older plants. Its loss narrowed to $0.13 a share from $0.25.
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MAPLE LEAF FOODS INC. $20 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 141.9 million; Market cap: $2.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 0.8%; TSINetwork Rating: Average; www.mapleleaf.ca) ships only a small portion of its pork products to Russia, so that country’s recent ban on food imports from Canada will have little effect on its sales and earnings. Pork prices have moved up recently, because a virus has cut hog supplies. As a result, consumers have shifted to beef and other meats. However, the Russian pork ban could cut prices in Canada, which would help spur demand for Maple Leaf’s products. Meanwhile, Maple Leaf’s sales rose 9.6% in the three months ended June 30, 2014, to $831.8 million from $759.3 million a year earlier, as higher selling prices offset lower volumes. The company continues to restructure, including closing older plants. Its loss narrowed to $0.13 a share from $0.25....
MAPLE LEAF FOODS INC. $19 (www.mapleleaffoods.com) owned 90.0% of Canada Bread (see above), so it received $1.66 billion for its shares. That’s equal to 64% of Maple Leaf’s $2.6-billion market cap....
ENCANA CORP. $26 (www.encana.com) has completed its plan to sell shares of subsidiary PrairieSky Royalty Ltd. (Toronto symbol PSK) to the public. PrairieSky owns the oil and natural gas rights to 5.2 million acres in Alberta....
BANK OF NOVA SCOTIA, $69.63, Toronto symbol BNS, reported better-than-expected earnings this week, as gains at its Canadian banking, wealth management and securities-trading operations offset weaker earnings growth overseas. In the quarter ended April 30, 2014, the bank’s earnings rose 13.9%, to $1.8 billion, or $1.39 a share, beating the consensus estimate of $1.32. A year earlier, Bank of Nova Scotia earned $1.6 billion, or $1.22 a share. Revenue rose 9.8%, to $5.7 billion from $5.2 billion. Earnings at the Canadian banking division (which supplies 32% of the bank’s total) rose 11.4%. The gain is partly due ING Direct (now called Tangerine), which Bank of Nova Scotia bought for $3.1 billion in November 2012. Higher credit card balances and steady mortgage and car loan demand also contributed....
CANADIAN PACIFIC RAILWAY LTD., $169.99, Toronto symbol CP, and CANADIAN NATIONAL RAILWAY CO., $61.98, Toronto symbol CNR, have had trouble shipping last year’s record grain harvest on the Prairies to Canada’s west coast due to bad winter weather. To help clear the backlog, Ottawa now plans to fine CP and CN if they fail to ship a minimum amount of grain per day. The railways already plan to increase shipments as the weather improves, so any fines should be small next to their earnings. CP Rail and CN Rail are still buys....
ROYAL BANK OF CANADA, $72.16, Toronto symbol RY, earned $2.1 billion in the quarter ended January 31, 2014, up 2.2% from $2.05 billion a year earlier. Per-share earnings rose 3.0%, to $1.38 from $1.34, on fewer shares outstanding. Excluding a loss on the sale of its Jamaican banking operations, Royal earned $1.44 share in the latest quarter, matching the consensus forecast. Overall revenue rose 7.6%, to $8.5 billion from $7.6 billion. Revenue at Royal’s retail banking division (which supplied 40% of the total) rose 6.9%. That’s partly due to its February 2013 purchase of Ally Financial’s Canadian operations for $3.7 billion. Ally, which provides car loans through 1,600 dealerships, contributed $62 million to Royal’s revenue and $22 million to its earnings in the latest quarter. Higher demand for mortgages and consumer and business loans also contributed to the improved results....
CANADA BREAD CO. LTD., $72.30, Toronto symbol CBY, has accepted a $72.00-a-share takeover offer from Mexican bakery giant Grupo Bimbo SAB. Canada Bread’s shares are trading slightly higher than the bid. That’s because the deal lets the company keep paying quarterly dividends of up to $0.75 a share until Grupo Bimbo completes the takeover, probably by June 30, 2014. Before the deal, Canada Bread paid quarterly dividends of $0.50 a share. Investors should tender their shares to Grupo Bimbo to receive the full $72.00 without paying brokerage fees....