We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Univar (UNVR) this Earnings Season?
Read MoreHide Full Article
Univar Inc. is expected to release third-quarter 2016 results ahead of the bell on Nov 4.
Univar is a global distributor of chemicals and innovative services, offering solvents, resins, pigments, acids, bases, surfactants, glycols, inorganic compounds and alcohols. It also provides transportation and warehousing infrastructure, chemicals and hazardous materials’ handling services. The company serves the coatings and adhesives, food, oil and gas, personal care and pharmaceutical industries.
Last quarter, this chemical company’s earnings beat the Zacks Consensus Estimate, posting a positive surprise of 61.11%. However, the company has delivered an average negative earnings surprise of 31.52% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
Univar reported revenues of $2,262.5 million in the second quarter of 2016, down 9.9% year over year owing to lower demand from upstream oil and gas markets, as well as lower average prices. The company’s net earnings were $39.8 million against a loss of $12.4 million in the prior-year quarter.
Univar faced headwinds in the upstream oil and gas markets in the second quarter despite a slight improvement in the rig count. Demand in the market declined through the quarter and is not expected to improve in 2016. The company is focused on reducing direct operating costs in this space due to weak prices.
Univar also intends to continue implementing initiatives targeted at growth. The company is executing several cost saving programs in an attempt to drive productivity and operational excellence and grow organically. The company also expects its asset-light business model, which provides stability, to sustain in the current uncertain macroeconomic environment.
Moreover, with the sluggish macro economic conditions, Univar looks to strengthen its balance sheet by reducing debt. The company has $40 million of scheduled debt amortization payments in 2016. Earlier in the year, management had indicated that it would aim at paying back double the amount and is on track to meet or even exceed that target.
For the second half of 2016, Univar expects industrial demand to remain sluggish and chemical prices to remain lower year over year. Currency headwinds are also expected to impact the company’s results. However, its organic growth initiatives along with growth in service businesses and acquisitions are expected to offset some of the negative impact. The company projects adjusted EBITDA for the period to be slightly below that of first-half 2016, divided roughly equally between the third and fourth quarters. Adjusted EBITDA for 2016 is expected in the range of $550−$565 million,
Earnings Whispers
Our proven model does not conclusively show that Univar is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Univar is currently pegged at 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both stand at 20 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Univar carries a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Stocks that Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Scotts Miracle-Gro Company (SMG - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #2.
Minerals Technologies Inc. (MTX - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
What's in Store for Univar (UNVR) this Earnings Season?
Univar Inc. is expected to release third-quarter 2016 results ahead of the bell on Nov 4.
Univar is a global distributor of chemicals and innovative services, offering solvents, resins, pigments, acids, bases, surfactants, glycols, inorganic compounds and alcohols. It also provides transportation and warehousing infrastructure, chemicals and hazardous materials’ handling services. The company serves the coatings and adhesives, food, oil and gas, personal care and pharmaceutical industries.
Last quarter, this chemical company’s earnings beat the Zacks Consensus Estimate, posting a positive surprise of 61.11%. However, the company has delivered an average negative earnings surprise of 31.52% in the trailing four quarters.
Let’s see how things are shaping up for this announcement.
UNIVAR INC Price and EPS Surprise
UNIVAR INC Price and EPS Surprise | UNIVAR INC Quote
Factors to Consider
Univar reported revenues of $2,262.5 million in the second quarter of 2016, down 9.9% year over year owing to lower demand from upstream oil and gas markets, as well as lower average prices. The company’s net earnings were $39.8 million against a loss of $12.4 million in the prior-year quarter.
Univar faced headwinds in the upstream oil and gas markets in the second quarter despite a slight improvement in the rig count. Demand in the market declined through the quarter and is not expected to improve in 2016. The company is focused on reducing direct operating costs in this space due to weak prices.
Univar also intends to continue implementing initiatives targeted at growth. The company is executing several cost saving programs in an attempt to drive productivity and operational excellence and grow organically. The company also expects its asset-light business model, which provides stability, to sustain in the current uncertain macroeconomic environment.
Moreover, with the sluggish macro economic conditions, Univar looks to strengthen its balance sheet by reducing debt. The company has $40 million of scheduled debt amortization payments in 2016. Earlier in the year, management had indicated that it would aim at paying back double the amount and is on track to meet or even exceed that target.
For the second half of 2016, Univar expects industrial demand to remain sluggish and chemical prices to remain lower year over year. Currency headwinds are also expected to impact the company’s results. However, its organic growth initiatives along with growth in service businesses and acquisitions are expected to offset some of the negative impact. The company projects adjusted EBITDA for the period to be slightly below that of first-half 2016, divided roughly equally between the third and fourth quarters. Adjusted EBITDA for 2016 is expected in the range of $550−$565 million,
Earnings Whispers
Our proven model does not conclusively show that Univar is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Univar is currently pegged at 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate both stand at 20 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Univar carries a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Stocks that Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Koppers Holdings Inc. (KOP - Free Report) has an Earnings ESP of +18.18% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Scotts Miracle-Gro Company (SMG - Free Report) has an Earnings ESP of +15.39% and a Zacks Rank #2.
Minerals Technologies Inc. (MTX - Free Report) has an Earnings ESP of +0.86% and a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>