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Momentum

Universal Corp. has been a shining light in the volatile market, recently hitting a new 52-week high as investors shift into more conservative assets.

Company Description

Universal Corp, through its subsidiaries, operates as a leaf tobacco merchant globally. The company was founded in 1888 and has a market cap of $1.03 billion.

Tobacco and dividend stocks are viewed as being defensive assets, and since UVV is both, shares just hit a new 52-week high in the recently volatile market. Solid second-quarter results from early November also gave the company a nice boost.

Second-Quarter Results

Revenue for the period was down 2% from last year to $603 million due to lower volume in South America and currency weakness in Europe. When removing special, one-time charges, earnings for the period came in at $1.42, a sharp improvements from last quarter's 44 cents.

Cost of sales were down 2% on the quarter and 6% over the last six months, helping the company expand margins on a small dip in sales.

Financial Profile

The company has also been strengthening its financial profile, with total debt falling $201 million from last year to $598 million against cash and short-term investments of $46 million.

Estimates

We saw some sharp movement in estimates off the recent quarter, with the current year adding 13% to $4.50.

Valuation

With a forward P/E of 10X, UVV trades at a discount to the industry average of 14X.

6-Month Chart

On the chart, shares recently hit a new 52-week high in the weak market. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.

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