Author: Consultant

ummary

• Loblaw (L.TO) declined 4.3%, closing August 7 at C$62.96.
• George Weston (WN.TO) declined 3.4%, closing at C$101.21.
• Both companies fell despite solid Q2 earnings because food same-store sales growth slowed and the positive results were largely reflected in their valuations.
• Weston followed Loblaw lower because Loblaw is its principal operating investment.
• Rotation away from defensive consumer-staples shares also contributed; TTCS fell approximately 1.6% while the TSX Composite gained 3.3%.

Weekly Performance

Date	Loblaw close	Daily change	George Weston close	Daily change
July 31	C$65.81	—	C$104.77	—
August 4	C$65.31	−0.76%	C$103.23	−1.47%
August 5	C$64.09	−1.87%	C$101.99	−1.20%
August 6	C$63.30	−1.23%	C$102.12	+0.13%
August 7	C$62.96	−0.54%	C$101.21	−0.89%
Weekly change		−4.33%		−3.40%

Loblaw: Why the Shares Declined

Loblaw’s Q2 operating results were positive:

Q2 2026 measure	Result
Revenue	C$15.27 billion, +4.1% YoY
Retail sales	C$15.05 billion, +4.1%
Adjusted EBITDA	+5.1%
Adjusted diluted EPS	+11.9%
E-commerce sales	+19.3%
Food same-store sales	+1.6%
Drug retail same-store sales	+4.6%

Despite the earnings growth, three factors likely pressured the shares.

1. Food same-store growth slowed

Food same-store sales increased only 1.6%, compared with 3.5% a year earlier. New stores helped total sales growth, but the slower comparable-store result raised questions about underlying organic growth.

Discount banners such as No Frills and Maxi continued to perform well, but conventional grocery operations faced more modest growth.

2. “Sell-the-news” reaction

Loblaw entered the week following a strong period and solid Q2 expectations. Adjusted EPS beat estimates by only about 2%, while revenue was broadly in line. The results were good, but apparently not strong enough to support further immediate valuation expansion.

Analysts raised targets after the release—including reported targets of C$73 from BMO and C$72 from Desjardins—but this did not prevent short-term profit-taking.

3. Defensive-sector rotation

Investors moved toward mining, real estate and other economically sensitive sectors after weaker U.S. employment data reduced expectations of a Federal Reserve rate increase. The broader TSX gained 3.3%, while consumer staples declined.

This relative-performance gap indicates that part of Loblaw’s decline was sector rotation, not deterioration in its core business.

George Weston: Why It Followed Loblaw Lower

George Weston’s principal assets are:

• its controlling ownership position in Loblaw; and
• its interest in Choice Properties REIT.

Consequently, changes in Loblaw’s valuation materially affect WN’s share price.

George Weston reported:

Q2 2026 measure	Result
Revenue	C$15.20 billion, +4.1% YoY
Adjusted EBITDA	C$1.94 billion, +6.1%
Adjusted net earnings	C$436 million, +9.8%
Adjusted diluted EPS	C$1.14, +12.9%

However, reported net earnings fell approximately 48%, primarily because of unfavourable fair-value adjustments. These are largely accounting-related rather than evidence of a comparable operating decline, but they may have added headline pressure.

WN declined slightly less than Loblaw because its Choice Properties exposure provided some diversification and real estate performed relatively well during the week.

Interpretation

The week’s decline appears to be a valuation and positioning adjustment, rather than a clear breakdown in operating performance.

Positive fundamentals included:

• double-digit adjusted EPS growth;
• strong pharmacy and healthcare sales;
• 19.3% e-commerce growth;
• continued strength at discount grocery banners; and
• increased planned share repurchases.

The main concern was that 1.6% food same-store growth does not fully support an expanding valuation multiple without continued margin improvement and share repurchases.

Key Levels and Scenarios

Company	Initial support	Resistance	Base interpretation
Loblaw	C$61–62	C$65–67	Consolidation after earnings
George Weston	C$99–100	C$104–106	Tracks Loblaw with partial REIT diversification

Scenario	Likely development
Bull	Food comparable sales accelerate and margins remain firm
Base	EPS grows through margins, new stores and buybacks while shares consolidate
Bear	Same-store sales slow further or margin pressure offsets revenue growth

The positive thesis would weaken if food same-store growth remains below inflation for several quarters or if adjusted earnings stop growing faster than revenue.

Summary

• Alimentation Couche-Tard (ATD.TO) rose C$2.29, or 2.5%, during the week ending August 7, 2026.
• The shares closed at C$93.30, versus C$91.01 on July 31.
• ATD outperformed the TTCS Consumer Staples Index, which declined approximately 1.6%.
• The principal driver was continued positive reaction to Couche-Tard’s proposed US$8.6–8.7 billion acquisition of Żabka Group.
• The Wednesday decline reflected profit-taking and concern about the acquisition’s size and higher leverage.

Weekly Performance

Date	Closing price	Daily change
July 31	C$91.01	—
August 4	C$93.13	+2.33%
August 5	C$91.56	−1.69%
August 6	C$92.70	+1.25%
August 7	C$93.30	+0.65%
Weekly change		+2.52%

The TSX was closed August 3 for the Civic Holiday. ATD traded between C$90.57 and C$93.50 during the four-session week.

Why the Shares Increased

Żabka acquisition created growth expectations

On July 31, Couche-Tard announced an offer to acquire Poland-based Żabka Group. The transaction would:

• add approximately 13,000 convenience stores in Poland and Romania;
• increase the combined store network to approximately 30,300 locations;
• raise Europe’s share of the combined store base from roughly 30% to 60%;
• add approximately US$7.4 billion in annual revenue and US$1.1 billion in adjusted EBITDA; and
• provide an estimated US$250 million in annual synergies by the third year.

Management expects the transaction to improve adjusted EBITDA margins immediately and become accretive to earnings per share by the second year. These projections supported Tuesday’s 2.33% gain. Couche-Tard transaction announcement

Diversification away from fuel

Żabka earns more from convenience merchandise and food than traditional fuel sales. The acquisition would reduce Couche-Tard’s dependence on volatile North American fuel margins and increase its exposure to European convenience retailing.

Positive analyst sentiment

RBC had recently increased its price target from C$106 to C$111, maintaining an outperform rating. The broader analyst consensus remained positive, with an average target around C$102, although estimates vary by provider.

Why the Shares Fell Wednesday

The 1.69% Wednesday decline likely reflected investors reassessing the acquisition’s risks:

• Higher leverage: Couche-Tard expects net debt to adjusted EBITDA of approximately 3.0 times at closing.
• Execution risk: Żabka would be Couche-Tard’s largest acquisition.
• Purchase price: The offer values Żabka at approximately US$8.6–8.7 billion and includes a 9.4% premium.
• Regulatory risk: The transaction requires European, Polish and Romanian approvals.
• Synergy uncertainty: The US$250 million estimate will take approximately three years to achieve.

The subsequent Thursday and Friday recovery indicates that investors currently view the strategic benefits as outweighing these concerns.

Valuation and Technical Context

ATD finished the week only about 2% below its C$95.15 52-week high. This demonstrates strong momentum but also reduces the margin for disappointment.

Level	Interpretation
C$95–96	Immediate resistance and 52-week-high area
C$91–92	First support
C$88–90	Stronger support if acquisition concerns return
C$102	Approximate analyst consensus target
C$111	Recent RBC target

Scenarios

Scenario	Key development	Possible price response
Bull	Regulatory progress and confidence in US$250M synergies	Break above C$95 toward C$100–102
Base	Deal proceeds, but investors await financing details	Consolidation around C$90–96
Bear	Higher financing cost, regulatory delay or reduced synergy expectations	Retreat toward C$85–90

The positive thesis would be weakened if management raises the expected leverage, delays deleveraging beyond the second year, or fails to demonstrate a credible path to earnings accretion.

Summary

• TTCS is an index, not a stock: the S&P/TSX Capped Consumer Staples Index.
• For the week ending August 7, 2026, TTCS declined approximately 1.6%, based on its closely tracking XST ETF, which fell from C$68.05 to C$66.99.
• The decline occurred while the TSX Composite gained 3.3%, meaning staples materially underperformed the broader market.
• Weakness in Loblaw, George Weston, Metro and Empire outweighed gains in Alimentation Couche-Tard and Saputo.
• TTCS is highly concentrated: its four largest constituents represent approximately 78% of the index.

Leading Companies and Weekly Impact

Company	Symbol	Approx. weight	Weekly return*	Estimated index contribution
Alimentation Couche-Tard	ATD.TO	27.5%	+2.5%	+0.69 percentage points
Loblaw	L.TO	23.7%	−4.3%	−1.03 points
Metro	MRU.TO	14.4%	−2.9%	−0.41 points
George Weston	WN.TO	12.8%	−3.4%	−0.43 points
Saputo	SAP.TO	8.2%	+2.9%	+0.24 points
Empire	EMP.A.TO	5.0%	−4.0%	−0.20 points

*July 31 close to August 7 close. Contributions are estimates using recent XST portfolio weights; actual TTCS weights can vary with daily prices and index rebalancing.

What Drove the Index

1. Loblaw was the largest negative influence

Loblaw fell from C$65.81 to C$62.96, approximately 4.3%. Because it represents almost one-quarter of TTCS, its decline subtracted roughly one percentage point from the index.

The shares weakened despite previously reported Q2 profit growth and subsequent analyst target increases. This suggests:

• profit-taking after the earnings release;
• concerns that favourable results were already reflected in the valuation; and
• a rotation away from defensive companies as investors moved toward more cyclical sectors.

2. George Weston amplified Loblaw’s decline

George Weston fell from C$104.77 to C$101.21, approximately 3.4%.

Weston owns a controlling interest in Loblaw, so the two companies frequently move together. Since both are substantial TTCS constituents, the index has significant overlapping exposure to the Loblaw business. Together, they account for approximately 36.5% of the sector index.

3. Metro and Empire added grocery-sector weakness

Metro declined approximately 2.9%, while Empire fell about 4.0%. Their declines indicate that the weakness extended beyond Loblaw and affected Canadian grocery companies more broadly.

Possible factors include elevated valuations, margin concerns and profit-taking after a strong defensive-sector period. I found no single major sector-wide announcement that fully explains the decline.

4. Couche-Tard prevented a larger decline

Couche-Tard rose from C$91.01 to C$93.30, approximately 2.5%. As the largest holding, this contributed roughly 0.7 percentage points and materially reduced the damage from grocery stocks.

5. Saputo rebounded sharply Friday

Saputo finished the week at C$40.57, up approximately 2.9% from July 31. Its 4.75% Friday gain helped TTCS recover part of its earlier weekly decline.

Interpretation

TTCS’s decline does not necessarily indicate weakening demand for essential goods. The more likely explanation is a combination of:

• profit-taking in highly valued defensive companies;
• rotation into mining, real estate and other sectors that led the TSX rally;
• weakness in the heavily weighted Loblaw–George Weston group; and
• concentration risk within an index containing only about ten principal companies.

The index’s approximately 25 times earnings valuation remains relatively high for a defensive sector. Strong earnings growth is therefore required to prevent further valuation compression.

Key Levels and Scenarios

Scenario	Likely condition	TTCS implication
Bull	Loblaw stabilizes and ATD continues higher	Recovery toward the recent highs
Base	Mixed constituent performance	Sideways consolidation
Bear	Further declines in Loblaw, Weston and Metro	Continued sector underperformance

The TTCS thesis would improve if Loblaw and Weston regain upward momentum while ATD remains firm. It would weaken if grocery stocks continue falling despite stable earnings expectations.

The Aug 5, 2026 jump on the TSX Composite ($TXCX / S&P/TSX) was driven mainly by a surge in Shopify and a strong rally in gold/mining stocks, pushing the index to a fresh record close.

Key numbers

• Aug 4 close: 35,801.59 (+1.63%)
• Aug 5 close: 36,146.42 (+344.83 points / +0.96%)
• Intraday highs exceeded 36,400; the index topped 36,000 for the first time.

The 30-minute chart shows the sharp upward move that day (after the prior session’s strength).

Main drivers

1. Shopify earnings and outlook Shopify reported Q2 results with ~34% revenue growth (beat estimates), strong GMV, gross profit, and free-cash-flow growth (18% FCF margin). Management guided for continued low-thirties revenue growth in Q3 and highlighted AI tools boosting merchant activity. Shares jumped roughly 15–17% (one of its biggest single-day moves in nearly a year), lifting the broader technology sector ~4–5%. Shopify acted as a major positive catalyst for the index.
2. Gold and mining stocks Gold prices rose sharply on hopes of progress toward reopening the Strait of Hormuz (Iran-Oman talks and related comments from U.S. officials/Trump administration). This tempered some inflation and geopolitical risk concerns. The materials/mining group gained ~4.8–5.6%, with strong moves in names such as Eldorado Gold, Kinross, NovaGold, and others.
3. Supporting factors
   • Broader risk-on sentiment from Middle East de-escalation hopes (Strait of Hormuz deal optimism).
   • Positive contributions from other earnings (e.g., iA Financial).
   • Continuation of the prior day’s (Aug 4) strength in metals and tech.

Energy was weaker (oil mixed/soft at times), but the gains in tech and materials more than offset it. The move extended a strong start to August and marked consecutive record closes.

In short: Shopify’s strong report + gold-miner strength on Hormuz optimism produced the visible Aug 5 jump and new highs on the TSX.

Highlights

• Delivered Q2 2026 adjusted EPS ² of $0.69 and reported EPS of $0.34.
• Positioned to achieve 2026 adjusted EPS ² growth above the annual target range of 5-7% ³ and remain committed to 5-7% adjusted EPS ² growth through 2030 ³ .
• Strengthened year-to-date operating cash flow ⁴ by 8% versus the first six months of 2025.
• Safely advanced more than $1.7B of customer-focused infrastructure investments in the first half of 2026, while remaining on track to execute $4B annual capital plan this year.

“Our second quarter results reflect disciplined execution across the business and continued solid progress on our long-term growth strategy,” said Scott Balfour, President and CEO of Emera Inc. “During the first half of the year, we successfully concluded our portfolio optimization strategy with regulatory approval of the New Mexico Gas transaction and closing the sale of Grand Bahama Power Company. This further strengthens the company and sharpens our focus. Our utilities invested more than $1.7 billion on behalf of our customers in the same timeframe, supporting reliability, resiliency and growth across our jurisdictions. Looking ahead, our focused portfolio of high-quality regulated utilities positions Emera to continue delivering the reliable energy customers depend on, while creating long-term value for shareholders.“

Q2 2026 Financial Results

Q2 2026 adjusted net income attributable to common shareholders (“adjusted net income”) ² was $212 million, or $0.69 per common share, compared to $236 million, or $0.79 per common share, in Q2 2025. The decrease was primarily due to increased interest expense and foreign exchange (“FX”) losses at Corporate; decreased earnings at New Mexico Gas Company (“NMGC”); and lower earnings due to the sale of Grand Bahama Power Company (“GBPC”).

Q2 2026 reported net income was $105 million, or $0.34 per common share, compared to net income of $135 million, or $0.45 per common share, in Q2 2025. Reported income also included a $59 million increase in mark-to-market (“MTM”) losses, after-tax, and the $19 million loss on sale of GBPC, after tax and transaction costs, partially offset by the $72 million charges related to the pending sale of NMGC recognized in Q2 2025.

2026 YTD Financial Results

Year-to-date adjusted net income ¹ was $627 million or $2.06 per common share, compared with $615 million or $2.07 per common share year-to-date in 2025. Year-to-date adjusted net income ¹ increased $12 million primarily due to increased earnings at PGS, EES and TEC, higher equity earnings at Bear Swamp and higher income tax recovery at Corporate. These were partially offset by increased interest expense and higher operating, maintenance and general (“OM&G”) expenses at Corporate; lower earnings at NSPI and NMGC; and lower earnings due to the sale of GBPC.

Year-to-date reported net income was $667 million or $2.19 per common share, compared with net income of $718 million or $2.41 per common share, year-to-date in 2025. Year-to-date reported net income also included a $116 million decrease in MTM gain, after-tax, and the $19 million loss on sale of GBPC, partially offset by the $72 million charges related to the pending sale of NMGC recognized in Q2 2025.

The translation impacts of a stronger CAD on USD denominated earnings decreased net income attributable to common shareholders by $13 million in Q2 2026 and $43 million year-to-date compared to the same periods in 2025. In Q2 2026, the impact of the change in FX rates on adjusted net income was nil. Year-to-date, strengthening of the CAD decreased adjusted net income by $17 million, compared to the same period in 2025. These impacts include the effect of the FX hedges used to mitigate translation risk of USD earnings, which are included in Corporate in the Other segment.

Record Financial Performance and Strong Balance Sheet

• Q2 2026: A record $929 million in revenue, $543 million in net earnings and $650 million in operating cash flow.
• First half of 2026: A record $1.8 billion in revenue, record $1.1 billion in net earnings and record $1.4 billion in operating cash flow.
• Declared a quarterly dividend ¹  of $0.195 per common share and made two quarterly dividend payments totaling $177 million.
• Balance Sheet: Cash balance of $100 million and debt outstanding totaling $2.0 billion, resulting in total net debt of $1.9 billion.
  • Enhanced financial flexibility by upsizing the Revolving Credit Facility by $500 million to $2.5 billion, extending the maturity date by one year to June 30, 2031, and broadening the lending syndicate. 
  • Together with the $500 million accordion feature under the Revolving Credit Facility, the Company has $2.6 billion of available liquidity.

High Quality Asset Base

• Streaming and royalty agreements on 22 operating mines, 20 development projects and 15 exploration & other stage projects, totaling 57 assets ⁵ .
• Delivered attributable gold equivalent production ³  (“GEOs”) of 202,200 ounces in the second quarter of 2026, a 6% increase relative to the comparable period of the prior year primarily due to the acquisition of the precious metals purchase agreement (“PMPA”) with BHP Group Limited (“BHP”) for its 33.75% portion of the silver produced at Antamina (the “BHP Antamina PMPA”), in addition to the continued realization of the Company’s growth strategy with production from Hemlo, Fenix, Platreef and Goose.
• Further de-risking of industry leading forecast growth profile with advancement of construction activities at a number of development projects, including Mineral Park, Platreef, Fenix, El Domo, Kurmuk, and Koné.
• On April 1, 2026, the Company entered into a PMPA with KGL Resources Limited (“KGL”) for a portion of the gold and silver produced at the Jervois project located in Australia.
• On April 20, 2026, the Company entered into a Royalty agreement with Spanish Mountain Gold Limited (“Spanish Mountain Gold”) for a 1.5% net smelter returns royalty on gold and silver production from the Spanish Mountain Gold project.
• On June 4, 2026, the Company entered into a Royalty agreement with Cipango Limited (“Cipango”) for a 1.5% net smelter returns royalty covering seven mineral exploration properties located in Japan.

Q2 2026 HIGHLIGHTS

• Backlog of $4.0 billion at quarter-end provides revenue visibility for 2026 and beyond and compares to $4.6 billion as of Q2 2025. This is an increase of $310 million compared to Q1 2026 driven by strong bookings in the quarter that exceeded conversion of backlog into revenue.
• Revenues of $498.6 million in Q2 2026 were up 33.6% year-over-year driven by higher volumes across all business areas in the quarter.
• Adjusted EBITDA of $96.3 million in Q2 2026 increased 26.2% year-over-year driven by higher volumes of work. Adjusted EBITDA margin of 19.3% in Q2 2026 is consistent with the Company’s full year margin guidance of 18%-20%.
• Net income of $27.9 million in Q2 2026 was up 2.6% year-over-year. Diluted earnings per share was $0.20 in Q2 2026, a decrease of 9.5% year-over-year driven primarily by the increase in the average number of common shares outstanding following the Company’s initial public offering on the New York Stock Exchange in March 2026.
• Adjusted net income in Q2 2026 was $51.8 million increasing 12.9% year-over-year driven by the higher gross profit, partially offset by investments in SG&A and R&D. Adjusted diluted earnings per share of $0.36 in Q2 2026 decreased 1.5% year-over-year as the higher adjusted net income was offset by higher average shares outstanding largely due to the abovementioned IPO in the US.
• Operating cash flow of $(93.4) million in Q2 2026 compared with $52.8 million in Q2 2025. The year- over-year decrease in operating cash flow was primarily due to normal program working capital fluctuations on major contracts.
• Free cash flow of $(150.2) million in Q2 2026 compared to $16.2 million in Q2 2025. The year-over- year decrease was driven by reduced operating cash flow as a result of the aforementioned lower working capital contributions as well as higher capital expenditures.
• Net cash position of $152.8 million at the end of Q2 2026 compares to a net debt position of $120.0 million as of December 31, 2025. The improved net cash position was largely driven by net proceeds received through the initial public offering in the United States, which was completed in March 2026.

2026 FINANCIAL OUTLOOK

As a trusted mission partner and leading global space technology provider, we are leveraging our capabilities and expertise to execute on targeted growth strategies across our end markets and business areas. Our strategic initiatives, which span across our three businesses, include investing in next generation space technology and services, expanding our presence in attractive markets and geographies, scaling and expanding operations, skills, and talent to meet current and future market demand, leveraging strategic mergers, acquisitions and partnerships to complement organic growth, and continuing to position ourselves as Canada’s national defence and space champion and a trusted supplier to partners and allies globally. We continue to make good progress against our long-term strategic plan.

MDA Space is well positioned to capitalize on strong customer demand and robust market activity given our diverse and proven technology offerings. Our growth pipeline is significant and underpinned by existing and new programs and our book of business is healthy.

Our fiscal 2026 outlook has been updated and now consists of the following:

• Narrowing Revenue to $1.8 – $1.9 billion, compared to $1.7 – $1.9 billion previously, representing year-over-year growth of approximately 13% at the mid-point of guidance and reflecting a solid H1 for MDA Space
• Narrowing Adjusted EBITDA to $330 – $370 million, compared to $320 – $370 million previously, representing year-over-year growth of approximately 8% at the mid-point of guidance
• Adjusted EBITDA margin is reaffirmed at 18% – 20%
• Capital expenditures are reaffirmed at $225 – $275 million to support another year of investments related to the production expansion at our Montreal facility and investments in chip development
• Free cash flow is reaffirmed to be neutral to negative driven by normal program working capital fluctuations

Sun Life Financial SLF-T +0.76%increase on Thursday reported a rise in second-quarter profit, driven by standout performance in its home market and Asia.

Sun Life also announced the retirement of board chair Scott Powers, who will be succeeded by Joseph Natale in May, 2027.

The company’s underlying earnings per share rose to $2.02 in the three months ended June 30, compared with $1.79 a year ago.

At its Canada business, underlying net income rose 23 per cent from the prior year to $427-million.

Sun Life to pay almost $3-billion for stakes in private credit and real estate management firms

Sun Life’s Asia underlying net income came in at $222-million in the second quarter, up 18 per cent from the prior-year period.

Global life insurers have increasingly relied on Asia to drive growth, as demand for protection and savings products remains strong.

“We saw strong momentum across our health and individual protection businesses,” President and CEO Kevin Strain said in a statement.

Sun Life, Canada’s second-largest life insurer with a market capitalization of roughly $63-billion, provides insurance, wealth management, asset management and health solutions to individual and institutional clients globally.

Its larger rival, Manulife Financial, also posted higher quarterly profits this week on the back of strong performance in its Asia and U.S. segments.

U.S. employers unexpectedly cut 23,000 jobs last month, and Labor Department revisions shaved 103,000 jobs off payrolls in May and June. But the unemployment rate dipped to 4.1 per cent as Americans left the job market.

The June jobs numbers from the Labor Department Friday marked a sharp reversal for the American labour market.

Hiring had rebounded this year from a lacklustre 2025 in the face of the conflict in the Persian Gulf that has sent energy prices surging and put a strain on family budgets. Job growth had been solid, if unspectacular. Some businesses are having trouble filling vacancies. Others are using technology to do the work humans used to do.