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Why Is Univar (UNVR) Down 11.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Univar (UNVR - Free Report) . Shares have lost about 11.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Univar due for a breakout? 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 drivers.

Univar's Earnings and Revenues Miss Estimates in Q3

Univar logged a profit (on a reported basis) of $49.6 million or 35 cents per share in third-quarter 2018, up 27.5% from a profit of $38.9 million or 28 cents a year ago.

Barring one-time items, earnings came in at 40 cents a share in the quarter, missing the Zacks Consensus Estimate of 42 cents.

The company’s revenues rose 4% year over year to $2,130.7 million in the quarter, falling shy of the Zacks Consensus Estimate of $2,164 million.

Gross profit rose around 3% year over year to $468.7 million in the quarter. Adjusted EBITDA margin expanded 10 basis points to 8.2%.

Segment Review

Revenues at the USA division increased 8.5% year over year to $1,285.3 million in the reported quarter. Gross profit rose 6.2% year over year to $290.4 million.

Revenues at the Canada segment declined around 8.8% year over year to $273.5 million. Gross profit fell 13.3% year over year to $48.7 million in the quarter.

The EMEA segment recorded sales of $472.4 million, up 3.4% year over year. Gross profit rose around 4.9% year over year to $107.9 million.

Sales from the Rest of World unit declined 6.9% to $99.5 million. Gross profit fell around 2.7% year over year to $21.7 million.

Balance Sheet

Univar ended the quarter with cash and cash equivalents of $85.9 million, down around 70% year over year. Long-term debt totaled $2,543.7 million, down around 11.4% year over year.

Outlook

Univar expects foreign exchange headwinds and challenges in Canada to dampen growth in the fourth quarter. The company expects fourth-quarter adjusted EBITDA to be flat with last year’s results. The guidance also takes into account demand softness in certain markets.

For 2018, Univar now anticipates adjusted EBITDA growth of high single-digit while adjusted earnings per share are projected at roughly $1.60 per share, reflecting an increase of 15.1% from the prior year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -16.34% due to these changes.

VGM Scores

Currently, Univar has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Univar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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