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Univar (UNVR) Gains From Nexeo Buyout, Cost-Reduction Actions
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Univar Solutions Inc. is gaining from acquisitions, cost optimization and expense management actions. However, certain headwinds related to the weak energy market in Canada, the exit of businesses and chemical prices are likely to hurt its sales and margins in the second half of 2021.
Shares of Univar are up 30.2% in the past year compared with 31% rise of the industry.
Image Source: Zacks Investment Research
Univar, a Zacks Rank #3 (Hold) stock, is poised to gain from market expansion and strategic acquisitions and its cost reduction actions.
The company is continuously seeking opportunities to enter new regions, reinforce its 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 the 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.
Univar 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 the reduction in travel and other discretionary spending.
However, Canada’s weak energy market due to lower transportation activities is weighing on the company. The exit of the country’s Agriculture wholesale distribution business and the divestiture of Agriculture services are also affecting the Canada segment’s sales. The unit’s sales in the third quarter are likely to take a hit as well due to the exit of these businesses.
Although the company gained from chemical price inflation in the first half of 2021, the benefits of higher prices are unlikely to continue in the second half. Univar expects normalization of chemical prices and a fall in prices in the second half of the year. This might exert some pressure on margins in the remaining quarters of 2021.
Image: Bigstock
Univar (UNVR) Gains From Nexeo Buyout, Cost-Reduction Actions
Univar Solutions Inc. is gaining from acquisitions, cost optimization and expense management actions. However, certain headwinds related to the weak energy market in Canada, the exit of businesses and chemical prices are likely to hurt its sales and margins in the second half of 2021.
Shares of Univar are up 30.2% in the past year compared with 31% rise of the industry.
Image Source: Zacks Investment Research
Univar, a Zacks Rank #3 (Hold) stock, is poised to gain from market expansion and strategic acquisitions and its cost reduction actions.
The company is continuously seeking opportunities to enter new regions, reinforce its 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 the 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.
Univar 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 the reduction in travel and other discretionary spending.
However, Canada’s weak energy market due to lower transportation activities is weighing on the company. The exit of the country’s Agriculture wholesale distribution business and the divestiture of Agriculture services are also affecting the Canada segment’s sales. The unit’s sales in the third quarter are likely to take a hit as well due to the exit of these businesses.
Although the company gained from chemical price inflation in the first half of 2021, the benefits of higher prices are unlikely to continue in the second half. Univar expects normalization of chemical prices and a fall in prices in the second half of the year. This might exert some pressure on margins in the remaining quarters of 2021.
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) and Avient Corporation (AVNT - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy) and Dow Inc. (DOW - Free Report) , carrying a Zacks Rank #2 (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 28.9% in a year.
Avient has a projected earnings growth rate of 75.1% for the current year. The company’s shares have appreciated 104.4% in a year.
Dow has a projected earnings growth rate of 403% for the current year. The company’s shares have risen 41.8% in a year.