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It's been a good week for Univar Solutions Inc. (NYSE:UNVR) shareholders, because the company has just released its latest first-quarter results, and the shares gained 6.5% to US$25.29. Revenues were US$2.2b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.39, an impressive 30% ahead of estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from Univar Solutions' seven analysts is for revenues of US$8.60b in 2021, which would reflect a modest 4.7% increase on its sales over the past 12 months. Statutory earnings per share are predicted to bounce 313% to US$1.55. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.53b and earnings per share (EPS) of US$1.21 in 2021. Although the revenue estimates have not really changed, we can see there's been a very substantial lift in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target rose 16% to US$25.94, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Univar Solutions analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$18.50. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Univar Solutions' growth to accelerate, with the forecast 6.3% annualised growth to the end of 2021 ranking favourably alongside historical growth of 1.2% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.5% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Univar Solutions is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Univar Solutions following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Univar Solutions analysts - going out to 2025, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Univar Solutions (1 is concerning!) that you need to be mindful of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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