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Why You Should Add Univar (UNVR) Stock to Your Portfolio

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Univar Solutions Inc. is benefiting from expense management actions, market expansion and synergies of the Nexeo Solutions acquisition. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s delve deeper into the factors that make this Zacks Rank #2 (Buy) stock an attractive choice for investors right now.

An Outperformer

Shares of Univar have gained 16.3% over the past six months against the 2.6% rise of its industry. It has also outperformed the S&P 500’s 9.1% decline over the same period.

 

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Impressive Earnings Surprise History

Univar has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 29.7%, on average.

Estimates Going Up

Over the past two months, the Zacks Consensus Estimate for Univar for 2022 has increased around 23.9%. The consensus estimate for second-quarter 2022 has also been revised 41.5% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Upbeat Prospects

Univar is benefiting from market share gains, operational execution, cost minimization and a robust liquidity position. It is well placed to gain from consistent market expansion and acquisitions. Univar is also benefiting from chemical price inflation and higher industrial demand, which is contributing to its top line growth.

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. Univar is on track to achieve the targeted $120 million in annual net synergies from the Nexeo acquisition. It achieved $111 million through March 2022.

The buyout of Brazilian ingredients and specialty chemicals distributor Sweetmix is also anticipated to drive growth for the company’s Food Ingredients portfolio in Brazil and generate growth and cost synergies. This will also springboard its Latin American expansion.

Univar is also focused on cost-cutting, expense management and productivity actions, which are helping the company minimize operational costs and boost margins. It is taking a number of actions to reduce costs in the wake of the coronavirus pandemic, including reduction in travel and other discretionary spending.

The company also has a solid liquidity position. At the end of first-quarter 2022, its liquidity was around $1.1 billion, including around $245.4 million cash and cash equivalents. UNVR also expects the majority of its debt obligations to mature in 2026 and beyond. The company reduced leverage ratio to 2.4x at the end of first-quarter 2022 from 2.5x at the end of 2021.

 

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , Albemarle Corporation (ALB - Free Report) and Cabot Corporation (CBT - Free Report) .

Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 163.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 27.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 5.8%, on average. NTR has rallied 50% in a year.

Albemarle has a projected earnings growth rate of 203.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 105% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 41% in a year. The company flaunts a Zacks Rank #1.

Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 21.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 5.2% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 16% over a year.


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