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Univar (UNVR) Up 21% in 3 Months: What's Driving the Rally?
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Univar Solutions Inc.’s shares have surged 20.6% over the past three months. The company has also outperformed its industry’s growth of 8.2% over the same time frame. Moreover, it has topped the S&P 500’s 3.3% decline over the same period.
Let’s take a look into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Going in UNVR’s Favor?
Forecast-topping earnings performance in the third quarter and upbeat prospects have contributed to the run-up in Univar’s shares. The company’s adjusted earnings per share of 84 cents for the third quarter rose from 62 cents in the year-ago quarter. It also topped the Zacks Consensus Estimate of 75 cents. Revenues climbed around 20% year over year to $2,983.5 million and surpassed the Zacks Consensus Estimate of $2,928.4 million.
Univar is gaining from market share gains, operational execution, cost minimization and a strong liquidity position. It is well placed to gain from consistent market expansion and acquisitions. Univar is also benefiting from its pricing discipline to counter inflation and higher industrial demand, which are contributing to its top line growth.
The acquisition of Nexeo Solutions has also enhanced Univar’s capabilities and accelerated its ability to create a significant value for customers, supplier partners, employees and shareholders. The company is benefiting from the synergies of the Nexeo acquisition.
The buyout of Brazilian ingredients and specialty chemicals distributor Sweetmix will also 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. Revenues from the company’s LATAM unit went up 21% year over year in the third quarter, partly driven by the Sweetmix acquisition.
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 third-quarter 2022, its liquidity was $1,077.3 million, including cash and cash equivalents of $276.3 million. UNVR also expects the majority of its debt obligations to mature in 2026 and beyond. The company reduced leverage ratio to 2.1x at the end of third-quarter 2022 from 2.2x at the end of second-quarter 2022.
Better-ranked stocks worth considering in the basic materials space include Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) , Olympic Steel, Inc. (ZEUS - Free Report) and Commercial Metals Company (CMC - Free Report) .
Sociedad has a projected earnings growth rate of 542.4% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 1.9% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 54% in a year. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Commercial Metals currently carries a Zacks Rank #1. The Zacks Consensus Estimate for CMC's current-year earnings has been revised 4.1% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 47% in a year.
Olympic Steel currently carries a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 1.8% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 69% in a year.
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Univar (UNVR) Up 21% in 3 Months: What's Driving the Rally?
Univar Solutions Inc.’s shares have surged 20.6% over the past three months. The company has also outperformed its industry’s growth of 8.2% over the same time frame. Moreover, it has topped the S&P 500’s 3.3% decline over the same period.
Let’s take a look into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Going in UNVR’s Favor?
Forecast-topping earnings performance in the third quarter and upbeat prospects have contributed to the run-up in Univar’s shares. The company’s adjusted earnings per share of 84 cents for the third quarter rose from 62 cents in the year-ago quarter. It also topped the Zacks Consensus Estimate of 75 cents. Revenues climbed around 20% year over year to $2,983.5 million and surpassed the Zacks Consensus Estimate of $2,928.4 million.
Univar is gaining from market share gains, operational execution, cost minimization and a strong liquidity position. It is well placed to gain from consistent market expansion and acquisitions. Univar is also benefiting from its pricing discipline to counter inflation and higher industrial demand, which are contributing to its top line growth.
The acquisition of Nexeo Solutions has also enhanced Univar’s capabilities and accelerated its ability to create a significant value for customers, supplier partners, employees and shareholders. The company is benefiting from the synergies of the Nexeo acquisition.
The buyout of Brazilian ingredients and specialty chemicals distributor Sweetmix will also 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. Revenues from the company’s LATAM unit went up 21% year over year in the third quarter, partly driven by the Sweetmix acquisition.
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 third-quarter 2022, its liquidity was $1,077.3 million, including cash and cash equivalents of $276.3 million. UNVR also expects the majority of its debt obligations to mature in 2026 and beyond. The company reduced leverage ratio to 2.1x at the end of third-quarter 2022 from 2.2x at the end of second-quarter 2022.
Univar Solutions Inc. Price and Consensus
Univar Solutions Inc. price-consensus-chart | Univar Solutions Inc. Quote
Zacks Rank & Key Picks
Better-ranked stocks worth considering in the basic materials space include Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) , Olympic Steel, Inc. (ZEUS - Free Report) and Commercial Metals Company (CMC - Free Report) .
Sociedad has a projected earnings growth rate of 542.4% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 1.9% upward in the past 60 days.
Sociedad has a trailing four-quarter earnings surprise of roughly 27.2%. SQM has rallied roughly 54% in a year. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Commercial Metals currently carries a Zacks Rank #1. The Zacks Consensus Estimate for CMC's current-year earnings has been revised 4.1% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 47% in a year.
Olympic Steel currently carries a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 1.8% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 69% in a year.