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Shares of Univar Solutions Inc. UNVR have rallied around 37% over the past three months. The company is benefiting from expense management and productivity 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 #1 (Strong Buy) stock an attractive choice for investors right now.
Shares of Univar have shot up 57.7% over a year against the 48.4% rise of its industry. It has also outperformed the S&P 500’s 32.4% rise over the same period.
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Over the past two months, the Zacks Consensus Estimate for Univar for 2021 has increased around 27%. The consensus estimate for second-quarter 2021 has also been revised 16.3% 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 $1.69 for Univar suggests year-over-year growth of 35.2%. Moreover, earnings are expected to register 51.5% growth in the second quarter.
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 30.9%, on average.
Superior Return on Equity (ROE)
Univar’s ROE of 13.1%, as compared with the industry average of 11.2%, manifests the company’s efficiency in utilizing shareholder’s funds.
Univar is well placed to gain from consistent market expansion and acquisitions. Notably, the acquisition of Nexeo Solutions will enhance capabilities and accelerate its ability to create significant value for customers, supplier partners, employees and shareholders. Univar is progressing well with the integration of Nexeo. The company expects to achieve annual net synergy from Nexeo of $120 million by early 2022.
Moreover, Univar is 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.
Univar is also seeing increased demand for products in its industrial solutions business. It witnessed strong demand in construction, automotive and general coatings in the first quarter. Strong demand in beauty and personal care business in North America also led to a double-digit sales growth in its consumer solutions business in the quarter. The company expects demand to remain robust in its focused markets in the second quarter.
The company is also poised to benefit from chemical price inflation due to disruption in the supply chain. Univar saw higher gross margins across all segments in the first quarter, partly driven by price inflation. It expects to continue to benefit from chemical price inflation in the second quarter amid persistent supply chain disruptions.
Univar Solutions Inc. Price and Consensus
Univar Solutions Inc. price-consensus-chart | Univar Solutions Inc. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Dow Inc. DOW, Cabot Corporation CBT and Impala Platinum Holdings Limited IMPUY.
Dow has a projected earnings growth rate of roughly 274.7% for the current year. The company’s shares have surged 51% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have shot up 47% in the past year. It currently carries a Zacks Rank #2 (Buy).
Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 134% in the past year. It currently carries a Zacks Rank #2.
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