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Why Is Univar (UNVR) Up 22.9% Since Last Earnings Report?

Zacks Equity Research
·4-min read

A month has gone by since the last earnings report for Univar (UNVR). Shares have added about 22.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Univar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Univar's Q3 Earnings and Revenues Surpass Estimates

Univar recorded profits of $130 million or 78 cents per share in third-quarter 2022, up from $84.4 million or 49 cents per share in the year-ago quarter.

Barring one-time items, earnings per share were 84 cents, up from 62 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 75 cents.

The company’s revenues were $2,983.5 million in the quarter, up around 20% year over year. The top line surpassed the Zacks Consensus Estimate of $2,928.4 million. The upside in sales can be attributed to the company’s pricing discipline to counter inflation and market share gains.

Segment Review

Revenues from the USA division rose around 25% year over year to $2,021.2 million in the quarter. The upside was primarily driven by pricing discipline and market share gains.

The EMEA segment raked in revenues of $486.5 million, up roughly 6% year over year, supported by pricing discipline in inflationary markets and market share gains.

Revenues from the Canada segment went up around 23% year over year to $273.9 million. The upside was led by pricing discipline and market share gains.

Revenues from the LATAM unit rose roughly 21% to $201.9 million, driven mainly by pricing discipline and the Sweetmix acquisition.

Financials

Univar ended the quarter with cash and cash equivalents of $276.3 million, up around 25% year over year. Long-term debt was $2,466 million, up around 12% year over year.

Net cash provided by operating activities rose to $257 million in the reported quarter from $123.7 million in the prior-year quarter. The company repurchased shares worth $100 million during the quarter.

Outlook

The company expects adjusted EBITDA for fourth-quarter 2022 to be $180-$200 million. For 2022, adjusted EBITDA is now forecast in the band of $1,050-$1,070 million, compared with $1,040-$1,080 million expected earlier. The guidance reflects strong operational execution, market share growth and cost management. The company also sees net free cash flow for 2022 to be around $400 million.

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How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, Univar has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Univar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Univar is part of the Zacks Chemical - Diversified industry. Over the past month, Dow Inc. (DOW), a stock from the same industry, has gained 8.6%. The company reported its results for the quarter ended September 2022 more than a month ago.

Dow Inc. reported revenues of $14.12 billion in the last reported quarter, representing a year-over-year change of -4.9%. EPS of $1.11 for the same period compares with $2.75 a year ago.

Dow Inc. is expected to post earnings of $0.57 per share for the current quarter, representing a year-over-year change of -73.5%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Dow Inc. Also, the stock has a VGM Score of A.

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Univar Solutions Inc. (UNVR) : Free Stock Analysis Report

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