A month has gone by since the last earnings report for Univar (UNVR - Free Report) . Shares have lost about 4.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Univar due for a breakout? 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 Earnings Beat, Sales Miss Estimates in Q2
Univar recorded a profit (on a reported basis) of $1.8 million or a penny per share in second-quarter 2020, down from $16.3 million or 10 cents per share in the year-ago quarter.
Barring one-time items, earnings per share were 33 cents, down from 42 cents in the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of 24 cents.
The company’s revenues were $2,009.2 million in the quarter, down 22.3% year over year. It trailed the Zacks Consensus Estimate of $2,125 million.
On a constant-currency basis, revenues fell 20.6% year over year.
Revenues in the USA division fell 27.2% year over year on a reported basis to $1,169.4 million in the quarter. The downside was due to lower industrial end market demand as well as the Environmental Sciences divestiture, price deflation and energy headwinds. These were partly offset by higher demand for products in essential end markets. Gross profit fell 19.1% year over year.
The EMEA segment raked in revenues of $409.6 million, down 10.5% year over year. The downside was caused by reduced industrial and end markets demand. Gross profit was down 3.3% year over year.
Revenues in the Canada segment fell 18.1% year over year to $331.5 million. The downside was due to lower industrial end market demand as well as the Environmental Sciences divestiture, price deflation and energy headwinds. Gross profit fell 18.8% year over year.
Revenues from the LATAM unit fell 15.4% to $98.7 million. Gross profit also dropped 0.8% year over year.
Univar ended the second quarter with cash and cash equivalents of $547.4 million, up nearly 400% year over year. Long-term debt was $2,902.1 million, down 6.9% year over year.
Net cash provided by operating activities was $151.7 million in the second quarter.
As disclosed earlier, the company withdrew its 2020 adjusted EBITDA guidance due to the evolving and dynamic implications of the coronavirus pandemic on its business as well as the macro-economic environment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -32.43% due to these changes.
Currently, Univar has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Univar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.