(The following article by Don MacDonald was posted on the Montreal Gazette website on April 19.)
MONTREAL — The latest financial-reporting season kicks off this week with a flurry of statements from Canadian companies including Montreal’s Canadian National Railway Co.
CN Rail, which also holds its annual meeting on Thursday, is coming off a month-long strike by cargo loaders, mechanics and clerical workers that crippled its container traffic.
Despite the strike, CN said last month it expected to match or beat last year’s earnings when it brings out its next quarterly report on Thursday.
The strike cost the railway between $35 million and $40 million in operating profit and 8 to 10 cents in earnings per share, the company warned last month.
Analyst Robert Fay said he expects a flat quarter from CN and added he will be keeping an eye on the railway to see if there are any lasting effects from the strike, which was settled late last month, on its container business.
Fay said he’s neutral on CN’s stock because he finds the share price high. CN shareholders have enjoyed a total return of more than 25 per cent in the last year.
“It’s a positive story. It’s just that the valuation is a little rich right now,” said Fay, an analyst at Canaccord Capital Corp.
In other events this week, Statistics Canada will release its latest snapshot of inflation in Canada.
Economists are predicting tomorrow’s release of consumer price index data for March will show that inflation continues to be muted.
BMO Nesbitt Burns economist Douglas Porter said he’s expecting the annual inflation rate will come in at a low 0.8 per cent, just a shade higher than February’s reading.
“Even with the big bounce we’ve seen in gasoline prices over the last little bit, almost everything else is extremely restrained,” Porter said.
“And clearly that’s why the Bank of Canada has been able to cut interest rates very aggressively. Inflation is right at the lower end of their target band.”
This week, Bank of Canada governor David Dodge will address committees of Parliament on the economy and the monetary picture. Porter said he isn’t expecting a lot of news from Dodge’s presentations tomorrow and Wednesday, coming as they do on the heels of last week’s interest-rate cut.
On the other hand, the markets will be keeping a close eye on Federal Reserve chairperson Alan Greenspan when he addresses congressional committees on the same days.
A big jump in interest-rate yields on bonds last week signalled the market is preparing for the Fed to begin jacking up rates as early as August.
In other quarterly releases this week, CoolBrands International, Cott Corp., Husky Energy and Rogers Communications report tomorrow; Goldcorp, Imperial Oil, Inco, CanWest Global Communications and Methanex on Wednesday; Astral Media, Barrick Gold, Celestica, Jean Coutu Group, Nexfor, Sears Canada, Terasen and Transalta on Thursday; and Abitibi-Consolidated and TransCanada Corp. on Friday.