Question

On February 27, 2007, Laurentian Bank of Canada released results for its first quarter, ending on January 31, 2007. It reported profit of 74 cents per share (70 cents per share before a non- recurring gain). Analysts’ estimates of profit for the quarter were 65 cents per share. For the same quarter of the previous year, profit was 59 cents per share. Total revenue increased 6%. The bank announced a quarterly dividend of 29 cents per share, unchanged from the two previous quarters. The CFO of Laurentian stated that its loan exposure to struggling forestry and manufacturing firms was better, although there was still room for improvement.
Laurentian’s shares are traded on the S& P/ TSX exchange. The TSX index rose 5 points on February 27, closing at 13,040.11. Laurentian’s share price fell 34 cents for the day, to $ 30.71.

Required
Why did Laurentian’s share price fall? Assume efficient securities markets, and consider both economy- wide and firm- specific factors in your answer.



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  • CreatedSeptember 09, 2014
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