By Jeff Sanford
Toronto, Ontario -- July 3, 2017 -- In this week’s Tuesday Ticker: Fix Auto USA isn’t letting Fix Auto World have the name without a fight, AkzoNobel execs talk about the new growth to come at the coatings company and Stephen Poloz, Governor of the Bank of Canada, gets ready to raise interest rates.
- An interesting story began to play out in the North American collision repair industry this past week. Steve Leal, President of Fix Auto World, officially announced plans to reacquire the company's US franchise license. The US trademark rights were licensed to a third party in 1997 and there are currently 110 Fix Auto locations in the US, but. Leal hopes to regain those trademark rights and to “directly enter the US market before the end of 2017,” as report by Collision Repair magazine.
Fix Auto USA President and COO Paul Gange was to quick to respond and has vowed to fight the legal challenge to take the name back. “They just want to steal what we’ve built,” Gange was quoted as saying in a report by our US-based content partner, Repairer Driven News. Gange was also quoted as saying, “Fix Auto USA’s 116 locations had been notified of the dispute and 'we stand united.'” This is a story that will continue to unfold in the months to come.
- Uni-Select recently had its target price raised by BMO Capital Markets from C$34.00 to C$35.00. The company also just announced that it opened its first greenfield store through its FinishMaster subsidiary in Nashville, Tennessee. According to a press release this is, “... the fifth FinishMaster location in Tennessee, but the first opened by the company rather than through acquisition. Overall, Finishmaster now has 216 branches in 33 states with expectations of further growth.”
- AkzoNobel is hustling to fulfill promises made to investors during the recent takeover attempt by PPG. On July 3 the company announced it will acquire a couple of companies in the coatings sector. AkzoNobel will acquire UK-based Flexcrete Technologies and French manufacturer Disa Technology (Disatech). “The deals will further strengthen AkzoNobel's global leadership position in supplying innovative industrial coatings and aerospace and automotive coatings,” according to a press release.
AkzoNobel CEO Ton Büchner was quoted as saying, "Both acquisitions support our strategy of investing in growth and innovation and are strongly aligned with our growth strategy ... These deals also offer us great opportunities to pursue further coatings innovations in a number of our core markets." AkzoNobel executives promised investors that existing management will deliver a new corporate growth plan.
- Auto Canada was the subject of a report on The Motley Fool that notes that over the month of June the company's share price appreciated, “... by 3.92 percent, translating to an annual return of approximately 47 percent.” According to the analyst who authored the report, “With a business model of consolidation ... the company will hold more power that any one car dealership on its own. The hope for investors is that this approach will lead to better margins and increasing profits,” according to the report. Shares in Auto Canada fell from a high of over $90 a share as the price of oil plunged. “With a very large number of auto dealerships located in Alberta ... the company saw shares decline to a 52-week low of less than $17.50 per share,” according to the report. The company continues to generate money. “During fiscal 2016, the company increased revenues by approximately $675 million in comparison to fiscal 2014 and made a bottom-line profit of $1.03 per share. Through the first quarter of 2017, the company has made a profit of $0.13 per share and paid a quarterly dividend of $0.10 ... At a current price of approximately $19 per share, the dividend yield is in excess of 2 percent with the potential to increase the total payout should things turn around in the oil patch,” according to the analyst.
Related Market Notes
- A flurry of articles have noted that the Canadian economy is doing rather well. This has led to speculation that a long period of oddly low interest rates is about to come to an end as the Governor of the Bank of Canada, Stephen Poloz, gets ready to raise them.
“The Canadian economy had another month of solid growth in April, building on strength seen in the first quarter and supporting expectations the Bank of Canada will soon begin increasing interest rates,” according to a report by Canadian Press. Doug Porter, Chief Economist at the Bank of Montreal, issued a report to clients: “While the April GDP report is no big surprise, it maintains a now lengthy run of Canadian data matching or topping expectations, and forecasts for 2017 growth just keep climbing ... In a word, there’s nothing here to dissuade the Bank of Canada from looking to start removing some of the stimulus, likely starting just next month.”
Any increase in rates charged by the Bank of Canada would be followed by rate increases in the prime rate at the big banks. Such a move will drive up the costs of variable-rate mortgages forcing some Canadian consumers to rein in spending. Poloz has hinted at a coming rate hike. A recent suggestion he made—that interest rate cuts made in 2015 have done their job—has led to speculation that a rate hike is coming.