snc lavalin

CANADIAN PACIFIC RAILWAY LTD., $83.18, Toronto symbol CP, reported higher-than-expected earnings this week. That caused the stock to rise 10%. In the three months ended June 30, 2012, the company’s earnings fell 19.5%, to $103 million, or $0.60 a share. It earned $128 million, or $0.75 a share, a year earlier. A nine-day strike by CP’s locomotive engineers, conductors and yard workers cut its earnings by around $0.30 a share in the latest quarter. In addition, the company paid severance costs to its previous CEO and other expenses related to the hiring of Hunter Harrison as its new chief executive. These costs cut CP’s earnings by a further $0.30 a share....

strong>SNC-LAVALIN GROUP INC. $38 (www.snclavalin.com) has paid an undisclosed sum for Toronto-based engineering firm DBA Engineering. This firm specializes in paving and environmental cleanup, and should help SNC win more infrastructure contracts....

RESEARCH IN MOTION LTD. $7.57 (www.rim.com) has delayed the launch of smartphones that use its new BlackBerry 10 software to the first quarter of 2013. That’s because the company is having difficulty adapting this software to its email and messaging servers. RIM had planned to launch these devices in the second half of 2012, in time for the important back-to-school and Christmas shopping seasons. Hold. SNC-LAVALIN GROUP INC. $38 (www.snclavalin.com) has paid an undisclosed sum for Toronto-based engineering firm DBA Engineering. This firm specializes in paving and environmental cleanup, and should help SNC win more infrastructure contracts. SNC’s stock has come under pressure in the past few months over unusual payments related to certain construction contracts. However, these amounts are small next to its earnings. Buy. TRANSCONTINENTAL INC. $9.60 (www.tctranscontinental.com) now owns 100% of Metro Montreal, a free commuter newspaper, after buying out its joint venture partner for an undisclosed amount. Owning all of this paper should make it easier for Transcontinental to attract more advertisers with special packages involving its websites and other media businesses. Buy.

SNC-LAVALIN GROUP INC. $39 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 161.1 million; Market cap: $6.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public works projects, such as roads, bridges, transit systems and water-treatment plants.

SNC’s shares fell from around $48 in February 2012 after the company discovered $35 million of unusual payments related to certain construction contracts.

A panel of independent directors and lawyers later found another unusual payment, bringing the total to around $56 million. The company didn’t say which projects are connected to these transactions.

...

These three industrial stocks are more volatile than our more conservative picks, like CP Rail and CN Rail (see page 61). Even so, their rising sales, healthy balance sheets and strong reputations in niche markets help temper their risk. All three also trade at attractive multiples to earnings. Moreover, they all kept paying dividends during the recession. However, we only see two as buys right now. SNC-LAVALIN GROUP INC. $39 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 161.1 million; Market cap: $6.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.3%; TSINetwork Rating: Average; www.snclavalin.com) is a leading Canadian engineering and construction company. It specializes in large-scale public works projects, such as roads, bridges, transit systems and water-treatment plants....

CANADIAN PACIFIC RAILWAY LTD., $75.67, Toronto symbol CP, is starting to benefit from its recent efficiency improvements. As well, more of its trains are running on time, thanks to the warmer-than-usual winter. In the three months ended March 31, 2012, CP’s average train speed rose 27% from a year earlier. It also had 28% more railcars in service, and terminal dwell (the time to load and unload railcars) fell 27%. As a result, CP now believes that it earned $0.80 to $0.83 a share in the quarter. That’s a lot better than the consensus estimate of $0.65 a share....

PLEASE NOTE: Our next Hotline will go out on Thursday, April 5, 2012. RESEARCH IN MOTION LTD., $14.63, Toronto symbol RIM, earned $418 million, or $0.80 a share, in its fiscal 2012 fourth quarter, which ended March 3, 2012 (all amounts except share price in U.S. dollars). These figures exclude a $346-million (after-tax) writedown of goodwill and a $197-million writedown of inventory of unsold BlackBerry smartphones. On this basis, RIM’s latest earnings fell short of the consensus estimate of $0.81 a share. The latest earnings are also down 55.2% from $934 million, or $1.78 a share, a year earlier....

SNC-LAVALIN GROUP INC. $39 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.9 million; Market cap: $5.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snclavalin.com) fell over 20% on February 28, 2012 after it announced that its 2011 earnings will be $80 million, or 18% below its earlier forecast. In 2010, SNC earned $437.0 million, or $2.87 a share.

The earnings drop is partly due to $35 million in unusual payments related to certain construction contracts. Because of the recent civil war, SNC will also write down the value of its Libyan operations, including a prison, an airport and a water treatment system, by $23 million. The company did not say if the unusual payments are connected to its Libyan projects.

SNC is working with its external auditors and lawyers to examine these payments and certain other contracts.

...

This is another in a series of video interviews in which Pat McKeough will give his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others will be comments on events that are affecting the markets and the economy. Today he has stock trading advice relating to the dilemma investors may face if there appear to be questionable dealings among insiders of a stock they own. Specifically, he refers to Canadian engineering giant SNC-Lavalin and a mysterious payment that many suspect to be tied to its involvement in Libya. Below is the transcription of Pat’s comments. ...

SNC-LAVALIN GROUP INC. $39 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 150.9 million; Market cap: $5.9 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.2%; TSINetwork Rating: Average; www.snclavalin.com) fell over 20% on February 28, 2012 after it announced that its 2011 earnings will be $80 million, or 18% below its earlier forecast. In 2010, SNC earned $437.0 million, or $2.87 a share. The earnings drop is partly due to $35 million in unusual payments related to certain construction contracts. Because of the recent civil war, SNC will also write down the value of its Libyan operations, including a prison, an airport and a water treatment system, by $23 million. The company did not say if the unusual payments are connected to its Libyan projects. SNC is working with its external auditors and lawyers to examine these payments and certain other contracts....