Trading Day for Thursday, Feb. 26, 2026

Trading Day Summary - February 29, 2024

Key Concepts:

• CIBC, TD Bank: Strong Q1 earnings driven by diversified revenue streams and capital markets performance.
• Cascades: Lowered profit forecast due to supply chain issues and increased costs.
• TSX/US Markets: TSX performing strongly, while US markets experienced a downturn, particularly in tech stocks (NVIDIA).
• Bank Earnings (Canadian): All six major Canadian banks exceeded expectations in Q1, fueled by wider net interest margins and strong trading results.
• Wealth Management: A significant driver of bank profitability, demonstrating resilience despite market fluctuations.
• Net Interest Margin (NIM): The difference between the interest income banks generate from loans and the interest they pay on deposits – a key profitability indicator.
• Gildan: Lower than expected 2026 targets, but acquisition of HanesBrands progressing smoothly.
• Québecor: Revenue and adjusted profit beat driven by Freedom Mobile acquisition and customer service focus.
• EQ Bank: Strong EPS growth, focus on efficiency, and upcoming PC Financial acquisition.
• Trade Desk, Papa John’s, IonQ: US market movers with varying performance drivers.

1. Canadian Bank Performance – Q1 Earnings

All six of Canada’s major banks released their quarterly earnings this week, all surpassing expectations. This strong performance is attributed to wider interest margins, higher fee income, and solid trading results. CIBC led the gains, hitting a record high after a 3.4% increase in share price, driven by Q1 results exceeding estimates and strong performance in its capital markets business. Record revenue was achieved across all units, marking the second consecutive year of exceeding expectations. TD Bank also saw a 1.5% increase in share price, with profit and revenue both exceeding estimates, boosted by a 18% year-over-year revenue jump, record revenue in Canada (driven by loan and deposit growth, and wealth management strength), a decline in provisions for credit losses, and higher banking revenue in its US division. Steve Earls (Trivest Wealth Counsel) highlighted the “diversified revenue streams” as a key factor in the banks’ success, noting a “double digit” beat across the board. He emphasized the positive impact of a “proper yield curve” and healthy net interest margins.

2. Wealth Management & Net Interest Margins

Wealth management was identified as a crucial component of bank profitability. Royal Bank saw a 32% increase in wealth management revenue in the last quarter. The positive performance is linked to a beneficial yield curve and healthy net interest margins. While acknowledging the inherent risk (“what goes up can go down”), Earls noted the “sticky” nature of wealth management fees and the potential for continued growth with diversified portfolios.

3. Cascades – Supply Chain & Cost Pressures

Cascades experienced a decline in share price following the release of a lower-than-expected profit forecast. Overall revenue fell due to lagging tissue sales, impacted by a power outage at one of its facilities, disrupting production, supply chain management, and increasing operating costs. Higher transportation and energy costs, linked to weather-related impacts in the US, contributed to the lowered forecast.

4. Market Performance – TSX vs. US Markets

The TSX demonstrated strong performance, rising 0.38% and nearing record territory, largely supported by the positive performance of the banking sector. Conversely, US markets experienced a downturn. The S&P 500 fell by over a point, the Dow Jones Industrial Average by 0.44%, and the NASDAQ by 1.83%, dragged down by NVIDIA and other tech stocks.

5. Gildan – HanesBrands Acquisition & Outlook

Gildan shares faced pressure after posting lower-than-expected targets for 2026. Despite a strong Q4, the focus is on the recent acquisition of HanesBrands. David Schwartz (Morningstar) described the acquisition as progressing “smoothly,” despite some potential short-term supply issues due to plant closures. Gildan anticipates $250 million in annual cost savings from the acquisition, exceeding the initial estimate of $200 million. Schwartz highlighted the company’s plan to sell its Australian business for approximately $700 million, providing a cash infusion for debt reduction. He maintains a positive outlook on Gildan, with fair value estimates significantly above the current stock price ($93 US, $128 CAD).

6. Québecor – Freedom Mobile Integration & Growth

Québecor’s results were boosted by the integration of Freedom Mobile, following its acquisition two years ago. CEO Pierre Karl Péladeau attributed the success to a focus on customer service, pricing innovation, and a digital-first approach (Fizz brand). The company is leveraging the regulatory framework designed to promote competition in the Canadian wireless market. Péladeau indicated no immediate plans for significant capital expenditure beyond maintaining network quality, and emphasized the potential for continued growth through the Freedom Mobile network. The company is increasing its dividend by 15%, reflecting its strong cash flow.

7. EQ Bank – Efficiency, PC Financial & Fintech Landscape

EQ Bank reported strong EPS growth, driven by improved efficiency (a 500 basis point improvement in one quarter) and a focus on its core business. CEO Chadwick Westlake highlighted the company’s cloud-based infrastructure and open API as advantages for AI implementation. The upcoming acquisition of PC Financial is expected to quadruple EQ Bank’s customer base and significantly increase revenue. Westlake emphasized the importance of the acquisition in driving competition and choice in the Canadian banking sector. He also noted the positive impact of Ottawa’s fast-track licensing framework for fintechs.

8. US Market Movers (Bloomberg’s Matthew Griffin)

• The Trade Desk: Shares plummeted (down over 70% since August) after a weaker-than-expected Q1 outlook, fueled by competition from Amazon and concerns about AI disruption.
• Papa John’s: Shares declined following a report of declining same-store sales in North America and plans to close 300 underperforming locations. Weak consumer demand was cited as a contributing factor.
• IonQ: Shares surged over 20% after reporting better-than-expected revenue, indicating growing adoption of quantum computing technology. However, the stock remains volatile and down 50% from its October high.

9. Data & Statistics:

• CIBC Share Price Increase: 3.4%
• TD Bank Revenue Increase: 18% (year-over-year)
• TSX Increase: 0.38%
• S&P 500 Decrease: >1 point
• Dow Jones Decrease: 0.44%
• NASDAQ Decrease: 1.83%
• Royal Bank Wealth Management Increase: 32%
• Gildan’s Projected Cost Savings (HanesBrands Acquisition): $250 million annually
• EQ Bank Efficiency Improvement: 500 basis points
• IonQ Share Price Increase: >20%
• The Trade Desk Share Price Decline (Since August): >70%

Conclusion:

The Canadian banking sector demonstrated remarkable strength in Q1, driven by favorable market conditions and diversified revenue streams. While challenges exist for companies like Cascades and Gildan, strategic initiatives and acquisitions are being pursued to navigate these headwinds. The US market presented a mixed picture, with tech stocks experiencing a downturn. The Canadian financial landscape is poised for further disruption with the integration of PC Financial into EQ Bank and the evolving regulatory environment for fintechs. Overall, the trading day highlighted the importance of adaptability, innovation, and a focus on customer value in a dynamic economic climate.