Why Is TNT Stock Up 44% After Earnings?

When it comes to finding stocks on their way up, a surge in share price can be enticing – if it lasts.

Amy Legate-Wolfe ❯

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published September 23, 2024 9:15 pm EDT

Earnings reports can be the ultimate rollercoaster for investors, acting as major catalysts that can send stock prices soaring or plummeting. When a company announces earnings that exceed expectations, it often sparks a surge of investor confidence, thus leading to a buying frenzy and a healthy bump in stock prices. On the flip side, if the earnings fall short of projections, panic can set in, thereby causing investors to scramble for the exits and triggering a sell-off. So today, let’s look at one stock experiencing the former, and why more growth could be on the way.

TNT stock

True North Commercial Real Estate Investment Trust (TSX:TNT.UN) is like that steady friend who always shows up with a solid plan, especially when it comes to real estate! Specializing in office and industrial properties across Canada, this real estate investment trust (REIT) is all about providing reliable income for its investors. With a diverse portfolio of well-located properties, True North focuses on long-term leases with quality tenants, which helps keep the cash flow rolling in. This makes it a favourite among those looking for stable, income-generating investments in the real estate sector.

What sets True North apart is its commitment to sustainability and responsible management, showing that it cares about more than just the bottom line. With a strong management team at the helm, it’s always on the lookout for new opportunities to expand its portfolio. All while ensuring it maintains a healthy balance between growth and risk.

Into earnings

True North Commercial REIT recently released its Q2 2024 earnings, and the results were enough to send its shares soaring! During the quarter, the REIT completed 152,600 square feet of leasing and renewals, with a weighted average lease term of 4.3 years. The star of the show was the normalized same property net operating income (NOI) growth of 2.4% – thus showcasing the REIT’s ability to maintain occupancy and foster strong tenant relationships. CEO Daniel Drimmer highlighted this achievement, stating, “This quarter saw continued strength in leasing activity achieved by the REIT, which translated into normalized same property net operating income growth of 2.4%.”

In addition to solid leasing activity, True North successfully sold four non-core assets, further boosting its financial liquidity. The REIT is also committed to its normal course issuer bid (NCIB) strategy, allowing it to repurchase trust units at a significant discount to their net asset value. With an occupancy rate of approximately 90% and an emphasis on maintaining a strong financial position, True North is not just holding its ground. It’s actively positioning itself for future growth. This upbeat performance reflects the REIT’s solid foundation and strategic approach to real estate, thus making it a compelling option for investors seeking stability and potential appreciation!

Still valuable

True North still has some compelling qualities that may make it a valuable investment. With a current market cap of approximately $189.2 million and a forward annual dividend yield of around 13.1% at writing, it offers a tempting income opportunity for dividend-seeking investors. Despite some fluctuations in revenue and NOI, the REIT has managed to maintain a solid occupancy rate of about 90% and a healthy focus on leasing activity. This indicates resilience in its operations. Plus, its recent efforts to strategically repurchase units at a discount could signal management’s confidence in the company’s value moving forward.

However, it’s essential to keep an eye on the financial ratios, as the REIT currently shows a profit margin down 39% and a total debt of $773.2 million. This could raise some eyebrows among more conservative investors. With a return on equity down 10.7%, there’s room for improvement. Yet the management team seems committed to navigating these challenges. As they say, “Where there’s a will, there’s a way,” and True North’s strategy to enhance liquidity and repurchase trust units may just be the way to reinforce its standing in the market. All in all, TNT.UN could still be worth considering, especially for those who appreciate a high-yield dividend investment with growth potential!