- During February, the industrials sector saw a slight upward trend in activity despite the earlier recession and interest rate worries
- The sector’s average just held up for the month with an overall 0.045 per cent gain
- Bombardier and Ballard Power Systems were some of the best-performing companies for the month
- Meanwhile, SNC-Lavalin Group and Aecon Group faced challenges that reflecting in their stock prices
- Despite mixed results, government infrastructure investments and analyst forecasts provide a hopeful future for the sector in the medium to long term
With another month behind us comes another monthly review of one of the TSX’s top sectors, industrials.
During February, this sector saw a slight upward trend in activity despite the earlier recession and interest rate worries.
The sector’s average only just held up for the month with an overall 0.045 per cent gain. However, certain companies showed a mixed performance in February, with some reporting strong gains while others faced steep losses.
Two of the best-performing companies in the industrial sector during February were Bombardier (BBD.B) and Ballard Power Systems (BLDP).
Gainers see a modest but hopeful increase
Multinational transportation company BBD.B saw its shares rise over the month and closed its shares at $68.09 on February 28.
The company’s stock price was boosted by strong earnings results for its final quarter of 2022, with revenues up 14 per cent compared to the same period in the previous year. Its EBITDA also increased, which it claims was driven by its business aviation segment.
BLDP, a fuel cell solutions and clean energy company, had an even stronger month, with its shares rising to a closing price of $7.80 on February 28.
The company’s stock price was boosted by a flurry of positive news, including a new order for a fuel cell system to CrossWind, a joint venture between Shell and Eneco.
However, not all companies in the TSX industrial sector fared well during February. Two of the worst-performing companies were Aecon Group (ARE) and SNC-Lavalin Group (SNC).
Biggest losers battling delays and geopolitical issues
ARE, a construction company specializing in infrastructure projects, saw its shares fall during the month, closing at $14.80 on February 28.
The company’s stock price was said to have been negatively impacted by delays and cost overruns on some of its major projects, including the Gordie Howe International Bridge connecting Windsor, Ontario, and Detroit, Michigan.
SNC, a global engineering and construction company, also had a difficult month, with its shares declining to a close price of $18.25 on February 28.
The company’s stock price was hit by a number of factors, including the ongoing fallout from a corruption scandal in Libya, which has resulted in legal and financial challenges for the company.
This appears to be a continued downward trend for SNC as it also announced weak financial results for its fourth quarter of 2022, with revenues down 7.00 per cent year-over-year and a net loss of $234 million.
Despite these mixed results, the overall outlook for Canada’s industrial sector remains positive, with the Canadian economy expected to continue its recovery from the pandemic in 2023.
The Bank of Canada has projected that real GDP growth will reach 4.80 per cent for this year and will likely be driven by a rebound in consumer spending, increased business investment, and higher export demand. This bodes well for companies in the industrial sector, which are likely to benefit from increased demand for their products and services.
In addition, the Canadian government has announced plans to invest heavily in infrastructure in the coming years, with a focus on green energy and sustainable transportation.
This is expected to create new opportunities for construction, engineering, and transportation companies, which could drive growth in the industrial sector in the medium to long term.