oil prices

BANK OF MONTREAL, $74.15, Toronto symbol BMO, reported better-than-expected results this week, thanks mainly to strong gains from its U.S. operations. In its fiscal 2016 first quarter, which ended January 31, 2016, the bank’s revenue rose 0.4%, to $5.08 billion from $5.06 billion a year earlier. That beat the consensus forecast of $4.88 billion. Overall earnings increased 13.2%, to $1.2 billion from $1.0 billion. Earnings per share gained 14.4%, to $1.75 from $1.53, on fewer shares outstanding. These figures exclude unusual items such as the cost to integrate recent acquisitions. On that basis, they exceed the consensus estimate of $1.72 a share....

Royal Bank of Canada lifts earnings with sale of home and auto insurance unit, purchase of boutique U.S lender

MART RESOURCES, $0.18, symbol MMT on Toronto, has entered into a definitive agreement to sell all shares in the company for $0.25 each to a consortium—Midwestern Oil and Gas Company Ltd., San Leon Energy plc and 1038221 B.C. Ltd. Apart from regulatory and shareholder approvals, the deal is contingent on the consortium arranging financing. This includes $89.2 million, due February 24, 2016, to cover the purchase price. The buyers need another $200.5 million U.S. in financing to pay off Mart’s bank debt. If the group fails to win financing by February 24, the consortium can back out of the agreement (although Mart may extend the deadline). If it does back out, the consortium will be required to pay a break fee to Mart of $2.2 million U.S....

RUSSEL METALS $18.27 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $987.9 million; Dividend yield: 8.3%) is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S. In the three months ended December 31, 2015, Russel’s revenue fell 33.6%, to $673.0 million from $1.01 billion a year earlier. Sales mainly declined because revenue fell 43% at the company’s energy products division. That unit sells pipes to oil and natural gas drillers. Earnings, excluding one-time items, dropped sharply, to $10.0 million, or $0.16 a share, from $38.0 million, or $0.62. Russel’s earnings fell faster than revenue because steel prices moved down in the latest quarter. That hurts its profit margins and causes it to suffer losses on its inventory....

RUSSEL METALS $18.27 (Toronto symbol RUS; TSINetwork Rating: Speculative) (905-819-7777; www.russelmetals.com; Shares outstanding: 61.7 million; Market cap: $987.9 million; Dividend yield: 8.3%) is one of North America’s largest metal distributors, serving 39,000 clients at 53 locations in Canada and 12 in the U.S. In the three months ended December 31, 2015, Russel’s revenue fell 33.6%, to $673.0 million from $1.01 billion a year earlier. Sales mainly declined because revenue fell 43% at the company’s energy products division. That unit sells pipes to oil and natural gas drillers. Earnings, excluding one-time items, dropped sharply, to $10.0 million, or $0.16 a share, from $38.0 million, or $0.62. Russel’s earnings fell faster than revenue because steel prices moved down in the latest quarter. That hurts its profit margins and causes it to suffer losses on its inventory....

FORTIS INC., $36.20, Toronto symbol FTS, has agreed to buy ITC Holdings Corp. (New York symbol ITC), which owns 25,100 kilometres of high-voltage power lines in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma. The company is paying $6.9 billion U.S. in cash and shares for ITC. Following the acquisition, ITC shareholders will own 27% of the combined company. Fortis will also list its shares on the New York Stock Exchange; its shares will continue to trade in Toronto. If you include ITC’s $4.4-billion U.S. debt, the total purchase price is $11.3 billion U.S. (or $15.7 billion Canadian). That’s roughly 1.5 times Fortis’s current market cap (the value of all outstanding shares) of $10.3 billion....

ROYAL BANK OF CANADA $66 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.5 billion; Market cap: $99.0 billion; Price-to-sales ratio: 2.9; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.rbc.com) is selling its RBC General Insurance subsidiary to Aviva Canada. This business mainly sells home and auto insurance. As part of the sale, Royal’s customers can also access all of Aviva’s insurance products for the next 15 years. The sale makes sense, as regulators prevent Canadian banks from selling insurance policies through their branches. That limits Royal’s ability to expand this business. However, the bank will continue to sell life and health insurance through separate offices and online....

PENGROWTH ENERGY CORP. $0.91 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 543.0 million; Market cap: $494.1 million; Price-to-sales ratio: 0.8; Dividend suspended in January 2016; TSINetwork Rating: Speculative; www.pengrowth.com) has suspended its $0.01-a-share quarterly dividend in response to the sharp decline in oil prices. It will also reduce its capital spending to between $60 million to $70 million in 2016, from $184 million in 2015. The company has also laid off workers, which should save it $25 million in 2016, and aims to sell $600 million of less important properties. It will probably put these funds toward its $2.1-billion debt, which is now a high 4.3 times its depressed market cap. Pengrowth is a hold.

ROYAL BANK OF CANADA $66 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.5 billion; Market cap: $99.0 billion; Price-to-sales ratio: 2.9; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.rbc.com) is selling its RBC General Insurance subsidiary to Aviva Canada. This business mainly sells home and auto insurance. As part of the sale, Royal’s customers can also access all of Aviva’s insurance products for the next 15 years. The sale makes sense, as regulators prevent Canadian banks from selling insurance policies through their branches. That limits Royal’s ability to expand this business. However, the bank will continue to sell life and health insurance through separate offices and online....

PENGROWTH ENERGY CORP. $0.91 (Toronto symbol PGF; Aggressive Growth and Income Portfolios, Resources sector; Shares outstanding: 543.0 million; Market cap: $494.1 million; Price-to-sales ratio: 0.8; Dividend suspended in January 2016; TSINetwork Rating: Speculative; www.pengrowth.com) has suspended its $0.01-a-share quarterly dividend in response to the sharp decline in oil prices. It will also reduce its capital spending to between $60 million to $70 million in 2016, from $184 million in 2015. The company has also laid off workers, which should save it $25 million in 2016, and aims to sell $600 million of less important properties. It will probably put these funds toward its $2.1-billion debt, which is now a high 4.3 times its depressed market cap. Pengrowth is a hold....