It has been about a month since the last earnings report for Univar (
UNVR Quick Quote UNVR - Free Report) . Shares have added about 3.2% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Univar's Earnings Beat, Sales Lag Estimates in Q3
Univar recorded a profit (on a reported basis) of $28.9 million or 17 cents per share in third-quarter 2020, up from $2.5 million or a penny per share in the year-ago quarter.
Barring one-time items, earnings per share were 34 cents, down from 36 cents in the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of 23 cents. The company’s revenues were $2,009.2 million in the quarter, down around 16% year over year. It trailed the Zacks Consensus Estimate of $2,203.4 million. Sales were hurt by reduced demand in the global industrial end markets, lower sales due to the Environmental Sciences divestiture as well as price deflation affecting specific products. Segment Review
Revenues in the USA division fell around 20% year over year on a reported basis to $1,269 million in the quarter. The decline was due to lower industrial end market demand, 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 12% year over year.
The EMEA segment raked in revenues of $400 million, down 6% year over year. The decline was caused by reduced industrial and end market demand. Gross profit was up 0.2% year over year. Revenues in the Canada segment fell 17% year over year to $235.4 million. The decline was due to lower agriculture and energy demand, the Environmental Sciences divestiture and price deflation. Gross profit fell roughly 15% year over year. Revenues from the LATAM unit rose roughly 3% to $120.5 million on increased demand for products in industrial solutions and certain essential end markets. Gross profit also increased around 13% year over year. Financials
Univar ended the third quarter with cash and cash equivalents of $273.7 million, a more than two-fold year-over-year rise. Long-term debt was $2,660.4 million, down around 11% year over year.
Net cash provided by operating activities was $8.1 million in the third quarter. Outlook
The company expects adjusted EBITDA to be roughly $140-$145 million for the fourth quarter of 2020. It also sees adjusted EBITDA to be in the band of $629-$634 million for full-year 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 108% due to these changes.
At this time, Univar has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Univar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.