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Univar Solutions (UNVR) Up 16% in 6 Months: What's Driving It?
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Univar Solutions Inc.'s shares have risen 16.5% over the past six months, outperforming its industry’s growth of 4.4%. It has also topped the S&P 500’s 6.8% rise over the same period.
Image Source: Zacks Investment Research
Let’s dive into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
What’s Favoring Univar?
Impressive results in the second quarter and upbeat prospects have contributed to the company’s share price increase. Its adjusted earnings of 57 cents per share in the quarter beat the Zacks Consensus Estimate of 50 cents. It generated net sales of $2,394.1 million, up 19.2% year over year.
Univar is benefiting from higher industrial end-market demand, strategic acquisitions, cost minimization and a robust liquidity position.
Univar is poised to gain from its market expansion and acquisition moves. The company is continuously seeking opportunities to enter new regions, reinforce product and service portfolio and is strengthening end-market capabilities through strategic buyouts. The acquisition of Nexeo Solutions has further enhanced its capabilities and accelerated its ability to create significant value for customers, supplier partners, employees and shareholders. The integration of Nexeo had generated $8 million of net synergies in the last reported quarter. The company expects to achieve an annual net synergy of $120 million (before tax) from Nexeo by first-quarter 2022. It expects net synergies of $20-$25 million for 2021.
The company remains focused on cost-cutting, expense management and productivity actions that are minimizing operational costs and boosting margins. It is taking a number of actions to reduce costs in the wake of the pandemic, including reduction in travel and other discretionary spending.
Univar has a solid liquidity position. At the end of second-quarter 2021, its liquidity was $882 million, including $207 million in cash and the availability under its asset-based credit lines. During the last reported quarter, the company refinanced $1.3 billion of term loans with a new $1 billion term loan. The company expects its liquidity to be more than $800 million at the end of 2021. Long-term debt was $2,215.1 million at the end of the second quarter, falling 23.7% year over year. The company paid down $279 million of debt in the quarter.
Univar announced an increase in its adjusted EBITDA guidance for 2021. It now sees adjusted EBITDA in a band of $705-$725 million for 2021, implying an increase from $635.8 million reported in 2020. Forecast for net free cash flow for the year has been reiterated in the band of $280-$300 million. It is also focused to reduce leverage to 2.7x or lower by the end of 2021.
Earnings estimates for Univar have also been going up over the past three months. The Zacks Consensus Estimate for 2021 earnings has increased 5.3% over the same time frame. The favorable estimate revisions instill investors’ confidence in the stock.
Image: Bigstock
Univar Solutions (UNVR) Up 16% in 6 Months: What's Driving It?
Univar Solutions Inc.'s shares have risen 16.5% over the past six months, outperforming its industry’s growth of 4.4%. It has also topped the S&P 500’s 6.8% rise over the same period.
Image Source: Zacks Investment Research
Let’s dive into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
What’s Favoring Univar?
Impressive results in the second quarter and upbeat prospects have contributed to the company’s share price increase. Its adjusted earnings of 57 cents per share in the quarter beat the Zacks Consensus Estimate of 50 cents. It generated net sales of $2,394.1 million, up 19.2% year over year.
Univar is benefiting from higher industrial end-market demand, strategic acquisitions, cost minimization and a robust liquidity position.
Univar is poised to gain from its market expansion and acquisition moves. The company is continuously seeking opportunities to enter new regions, reinforce product and service portfolio and is strengthening end-market capabilities through strategic buyouts. The acquisition of Nexeo Solutions has further enhanced its capabilities and accelerated its ability to create significant value for customers, supplier partners, employees and shareholders. The integration of Nexeo had generated $8 million of net synergies in the last reported quarter. The company expects to achieve an annual net synergy of $120 million (before tax) from Nexeo by first-quarter 2022. It expects net synergies of $20-$25 million for 2021.
The company remains focused on cost-cutting, expense management and productivity actions that are minimizing operational costs and boosting margins. It is taking a number of actions to reduce costs in the wake of the pandemic, including reduction in travel and other discretionary spending.
Univar has a solid liquidity position. At the end of second-quarter 2021, its liquidity was $882 million, including $207 million in cash and the availability under its asset-based credit lines. During the last reported quarter, the company refinanced $1.3 billion of term loans with a new $1 billion term loan. The company expects its liquidity to be more than $800 million at the end of 2021. Long-term debt was $2,215.1 million at the end of the second quarter, falling 23.7% year over year. The company paid down $279 million of debt in the quarter.
Univar announced an increase in its adjusted EBITDA guidance for 2021. It now sees adjusted EBITDA in a band of $705-$725 million for 2021, implying an increase from $635.8 million reported in 2020. Forecast for net free cash flow for the year has been reiterated in the band of $280-$300 million. It is also focused to reduce leverage to 2.7x or lower by the end of 2021.
Earnings estimates for Univar have also been going up over the past three months. The Zacks Consensus Estimate for 2021 earnings has increased 5.3% over the same time frame. The favorable estimate revisions instill investors’ confidence in the stock.
Univar Solutions Inc. Price and Consensus
Univar Solutions Inc. price-consensus-chart | Univar Solutions Inc. Quote
Stocks to Consider
Better-ranked stocks in the basic materials space include BASF SE (BASFY - Free Report) , Avient Corporation (AVNT - Free Report) and Dow Inc. (DOW - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF has a projected earnings growth rate of 96.7% for the current year. The company’s shares have rallied 24.9% in a year.
Avient has a projected earnings growth rate of 75.1% for the current year. The company’s shares have jumped 85.3% in a year.
Dow has a projected earnings growth rate of 403% for the current year. The company’s shares have jumped 36.1% in a year.