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Why Is Univar (UNVR) Up 6.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Univar (UNVR - Free Report) . Shares have added about 6.9% in that time frame, outperforming 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 catalysts.

Univar's Earnings Trail, Sales Beat Estimates in Q2

Univar logged a profit (on a reported basis) of $56.1 million or 40 cents per share in second-quarter 2018, compared with net income of $31.3 million or 22 cents a year ago.

Barring one-time items, earnings came in at 47 cents per share in the quarter, missing the Zacks Consensus Estimate by a penny.

The chemical maker’s revenues rose 5.6% year over year to $2,372.6 million in the quarter, beating the Zacks Consensus Estimate of $2,343 million.

Gross profit rose around 7.3% year over year to $500.5 million in the quarter. Adjusted EBITDA margin expanded 20 basis points to 7.3%.

Segment Review

Revenues at the USA division increased 10% year over year to $1.3 billion in the reported quarter. Gross profit rose 5.5% year over year to $290.8 million.

Revenues at the Canada segment declined around 8.4% year over year to $450.9 million. Gross profit rose 2.1% year over year to $68.9 million in the quarter.

The EMEA segment raked in sales of $511.9 million, up 10.4% year over year. Gross profit rose around 12.9% year over year to $118.2 million.

Sales from the Rest of World unit inched up 0.2% to $100 million. Gross profit grew 22.2% year over year to $22.6 million.

Balance Sheet

Univar ended the quarter with cash and cash equivalents of $128.6 million, down around 60% year over year. Long-term debt totaled $2,590.1 million, down around 10.5% year over year.

Outlook

For 2018, Univar continues to expect adjusted EBITDA growth of low-double digits. Adjusted earnings per share for the year are projected in the range of $1.65-$1.85.

Moreover, the company expects low double-digit growth in adjusted EBITDA for the third quarter.
 

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -8.7% due to these changes.

VGM Scores

Currently, Univar has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.

Outlook

Univar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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