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Univar Solutions (UNVR) Shares Up 46% in a Year: Here's Why
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Shares of Univar Solutions Inc. have risen 47.8% over the past year, outperforming its industry’s growth of 12.3%. The stock has also topped the S&P 500’s 26.9% rise over the same period.
Image Source: Zacks Investment Research
Let’s dive into the factors behind this chemical maker’s stock price appreciation.
What’s Driving the Momentum?
Univar is benefiting from higher prices, strategic acquisitions, cost minimization and a robust liquidity position. The benefits of chemical price inflation and strong market demand will likely boost its fourth-quarter performance.
Univar is likely to gain from its market expansion and acquisition moves. UNVR is continuously seeking opportunities to enter new regions and reinforce its product and service portfolio. It is also strengthening end-market capabilities through strategic buyouts. UNVR’s recent acquisition of the Brazilian ingredients and specialty chemicals distributor Sweetmix Distribuidora de Materias Primas Industriais Ltda is anticipated to drive growth for its Food Ingredients portfolio in Brazil and generate growth and cost synergies. This will also springboard its Latin American expansion.
The acquisition of Nexeo Solutions also enhanced Univar’s capabilities and accelerated its ability to create a significant value for customers, supplier partners, employees and shareholders. The integration of Nexeo is anticipated to unlock $25 million net synergies for this year. UNVR is on track to achieve an annual net synergy of $120 million (before tax) from Nexeo by first-quarter 2022.
Moreover, UNVR looks to improve its adjusted EBITDA margins by 9% within 2022 and expects to reduce leverage to 2.6X or lower by the end of 2021.
Univar also has a solid liquidity position. At the end of third-quarter 2021, its liquidity was nearly $1 billion, including around $221 million cash-in-hand and additional availability under committed, asset-based credit facilities. UNVR also expects strong liquidity and the majority of its debt obligations to mature in 2026 and beyond. Long-term debt was $2,198.8 million at the end of third-quarter 2021, falling 17.4% year over year.
UNVR’s sturdy cash position should allow it to meet its short-term debt obligations. It also announced a $500-million share repurchase program owing to its strong financial performance.
Univar remains committed to cost-cutting, expense management and productivity actions that are helping it minimize operational costs and boost its margins. It is taking a number of actions to reduce costs in the wake of the pandemic, including a decline in travel and other discretionary spending.
Moreover, Univar raised its guidance for adjusted EBITDA to the band of $770-$780 million from the previously expected $705-$725 million range for 2021. Its adjusted EBITDA was $635.8 million in 2020.
The stock also has an impressive record of positive earnings surprises. Earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 24.1%.
Key Picks
Univar currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are The Chemours Company (CC - Free Report) , Commercial Metals Company (CMC - Free Report) , and United States Steel Corporation (X - Free Report) .
Chemours currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for current-year earnings has been revised 12.9% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 34.2%. CC’s shares have rallied around 29% in a year.
Commercial Metals flaunts a Zacks Rank of 1 at present. The consensus estimate for CMC's current fiscal-year earnings has been revised 6.6% upward over the past 60 days.
Commercial Metals’ bottom line beat the Zacks Consensus Estimate in three of the last four quarters while the same missed the mark once. CMC has a trailing four-quarter earnings surprise of 7.4%, on average. CMC has rallied around 72% in a year.
United States Steel currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for X's current-year earnings has been revised 5.9% upward over the past 60 days.
United States Steel’s bottom line beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 24.5%. The stock has surged 32% in a year.
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Univar Solutions (UNVR) Shares Up 46% in a Year: Here's Why
Shares of Univar Solutions Inc. have risen 47.8% over the past year, outperforming its industry’s growth of 12.3%. The stock has also topped the S&P 500’s 26.9% rise over the same period.
Let’s dive into the factors behind this chemical maker’s stock price appreciation.
What’s Driving the Momentum?
Univar is benefiting from higher prices, strategic acquisitions, cost minimization and a robust liquidity position. The benefits of chemical price inflation and strong market demand will likely boost its fourth-quarter performance.
Univar is likely to gain from its market expansion and acquisition moves. UNVR is continuously seeking opportunities to enter new regions and reinforce its product and service portfolio. It is also strengthening end-market capabilities through strategic buyouts. UNVR’s recent acquisition of the Brazilian ingredients and specialty chemicals distributor Sweetmix Distribuidora de Materias Primas Industriais Ltda is anticipated to drive growth for its Food Ingredients portfolio in Brazil and generate growth and cost synergies. This will also springboard its Latin American expansion.
The acquisition of Nexeo Solutions also enhanced Univar’s capabilities and accelerated its ability to create a significant value for customers, supplier partners, employees and shareholders. The integration of Nexeo is anticipated to unlock $25 million net synergies for this year. UNVR is on track to achieve an annual net synergy of $120 million (before tax) from Nexeo by first-quarter 2022.
Moreover, UNVR looks to improve its adjusted EBITDA margins by 9% within 2022 and expects to reduce leverage to 2.6X or lower by the end of 2021.
Univar also has a solid liquidity position. At the end of third-quarter 2021, its liquidity was nearly $1 billion, including around $221 million cash-in-hand and additional availability under committed, asset-based credit facilities. UNVR also expects strong liquidity and the majority of its debt obligations to mature in 2026 and beyond. Long-term debt was $2,198.8 million at the end of third-quarter 2021, falling 17.4% year over year.
UNVR’s sturdy cash position should allow it to meet its short-term debt obligations. It also announced a $500-million share repurchase program owing to its strong financial performance.
Univar remains committed to cost-cutting, expense management and productivity actions that are helping it minimize operational costs and boost its margins. It is taking a number of actions to reduce costs in the wake of the pandemic, including a decline in travel and other discretionary spending.
Moreover, Univar raised its guidance for adjusted EBITDA to the band of $770-$780 million from the previously expected $705-$725 million range for 2021. Its adjusted EBITDA was $635.8 million in 2020.
The stock also has an impressive record of positive earnings surprises. Earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 24.1%.
Key Picks
Univar currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are The Chemours Company (CC - Free Report) , Commercial Metals Company (CMC - Free Report) , and United States Steel Corporation (X - Free Report) .
Chemours currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for current-year earnings has been revised 12.9% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 34.2%. CC’s shares have rallied around 29% in a year.
Commercial Metals flaunts a Zacks Rank of 1 at present. The consensus estimate for CMC's current fiscal-year earnings has been revised 6.6% upward over the past 60 days.
Commercial Metals’ bottom line beat the Zacks Consensus Estimate in three of the last four quarters while the same missed the mark once. CMC has a trailing four-quarter earnings surprise of 7.4%, on average. CMC has rallied around 72% in a year.
United States Steel currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for X's current-year earnings has been revised 5.9% upward over the past 60 days.
United States Steel’s bottom line beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 24.5%. The stock has surged 32% in a year.