Here's Why You Should Buy Univar (UNVR) Stock Right Now
Shares of Univar Solutions Inc. UNVR have gained around 23% over the past three months. The company is benefiting from expense management actions, market expansion, strong demand 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 #1 (Strong Buy) stock an attractive choice for investors right now.
An Outperformer
Shares of Univar have popped 46.9% year to date against the 14.3% rise of its industry. It has also outperformed the S&P 500’s 24.3% rise over the same period.
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Positive 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 24.1%, on average.
Estimates Going Up
Over the past two months, the Zacks Consensus Estimate for Univar for 2021 has increased around 9%. The consensus estimate for fourth-quarter 2021 has also been revised 18.4% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Healthy Growth Prospects
The Zacks Consensus Estimate for 2021 earnings of $1.94 for Univar suggests year-over-year growth of 55.2%. Moreover, earnings are expected to register a 66.7% growth in the fourth quarter of 2021.
Growth Drivers in Place
Univar is benefiting from higher industrial end-market demand, acquisitions, cost minimization and a robust liquidity position. It is also well placed to gain from consistent market expansion. Univar is also benefiting from chemical price inflation, which is contributing to its top line growth.
The acquisition of Nexeo Solutions has further enhanced the company’s capabilities and accelerated its ability to create significant value for customers, supplier partners, employees and shareholders. The integration of Nexeo is anticipated to bring in $25 million net synergies for this year. The company is on track to achieve an annual net synergy of $120 million (before tax) from Nexeo by first-quarter 2022.
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 2021, its liquidity was nearly $1 billion, including around $221 million cash-in-hand and additional availability under committed, asset-based credit facilities. The company also expects strong liquidity and the majority of its debt obligations to mature in 2026 and beyond.
Univar is also benefiting from the advancement of its Streamline 2022 (S22) program, designed to boost operational agility and sales. Under the program, the company is focused on improving adjusted EBITDA margins to 9% by the end of 2022 and expects to reduce leverage to 2.6x or lower by the end of 2021.
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, The Chemours Company CC and Intrepid Potash, Inc. IPI, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 10.6% upward over the last 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 42% in a year.
Chemours has a projected earnings growth rate of 105.1% for the current year. CC's consensus estimate for the current year has been revised 10% upward over the last 60 days.
Chemours beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 34.2%. CC has gained around 24% in a year.
Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the last 60 days.
Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 157% in a year.
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