Earnings Preview: Petrobank and CAE Inc.

Petrobank should report another strong quarter of oil production, Rona’s earnings are likely to be hit by bad weather, and CAE Inc. is expected to post another record year of simulator orders when first quarter results are released this week, UBS strategists say.

Andrew Potter, analyst at UBS said calgary-based Petrobank Energy and Resources Ltd. (PBEGF.PK) is predicted to report strong production numbers this quarter, up 286% on-year, to an average 23,667 barrels of oil equivalent per day, when it releases its first quarter results today. The market expects an earnings per share of C$1.68 in the quarter, up from C$0.25 a year earlier.

Mr. Potter said he would be watching for any changes to expectations of adding water handling capacity after water cuts to the Corcel wells, as well as news on the Corcel 4 well currently being drilled. Another key will be if Petrobank has gained regulatory clearance to drill three additional CAPRI wells in the third quarter.

Also due to report today is hardware distributor and retailer Rona Inc. [RON/TSX] is expected to post a first quarter EPS of C$0.05 compared to C$0.08 a year earlier. Vishal Shreedhar, analyst at UBS said:

We believe that the first quarter 2008 will be difficult given unfavourable weather, a calendar shift of Easter into the first quarter, and new statutory holidays.

He forecasts same-store sales to decline by 5.3% compared with a fall of 0.1% a year earlier and a 2.6% fall last quarter. He said:

We continue to believe that Rona is attractively valued.

Meanwhile, on Wednesday, flight simulator and aviation training centre provider CAE Inc. (CGT) is projected to post an EPS of C$0.17, up from C$0.14 a year ago. Fadi Chamoun, analyst at UBS said:

Commercial and business aircraft deliveries are projected to increase every year through at least fiscal 2010, which should underpin another record year of simulator orders for CAE. We also expect management to reiterate its previous guidance of a 10% on-year increase in civil training capacity over the next few years.