Why You Should Add Univar (UNVR) Stock to Your Portfolio Now
Univar (UNVR) benefits from higher industrial demand, strategic acquisitions and cost-management actions.
Shares of Univar Solutions Inc. UNVR have gained around 29% year to date. The company is benefiting from strong demand, expense management 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 #2 (Buy) stock an attractive choice for investors right now.
Shares of Univar have popped 33.6% over a year against the 15.7% rise of its industry. It has also outperformed the S&P 500’s 29.3% 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 25%, on average.
Estimates Going Up
Over the past two months, the Zacks Consensus Estimate for Univar for 2021 has increased around 1.7%. The favorable estimate revisions instill investor confidence in the stock.
Healthy Growth Prospects
The Zacks Consensus Estimate for 2021 earnings of $1.78 for Univar suggests year-over-year growth of 42.4%. Earnings are also expected to register 26.5% growth in the third quarter of 2021.
Univar is benefiting from higher industrial end-market demand, strategic acquisitions, cost minimization and a robust liquidity position. It is also well placed to gain from consistent market expansion and acquisitions.
The company’s industrial solutions business is seeing strong demand for many key products on the strength in construction and automotive markets. Its food and personal care business saw double-digit growth in the last reported quarter. Its general industrial business is witnessing solid demand across a number of markets, especially chemical manufacturing, machinery and paper.
The acquisition of Nexeo Solutions has also 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 had generated $8 million of net synergies in the last reported quarter. The company expects to achieve an annual net synergy of $120 million (before tax) from Nexeo by first-quarter 2022. It expects net synergies of $20-$25 million for 2021.
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 second-quarter 2021, its liquidity was $882 million, including $207 million in cash and the availability under its asset-based credit lines. The company expects its liquidity to be more than $800 million at the end of 2021.
Univar Solutions Inc. Price and Consensus
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, Nutrien Ltd. NTR and Olin Corporation OLN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor has a projected earnings growth rate of 537.4% for the current year. The company’s shares have surged around 97% in a year.
Nutrien has an expected earnings growth rate of 177.8% for the current year. The stock has also rallied around 68% over a year.
Olin has a projected earnings growth rate of 662.2% for the current year. The company’s shares have shot up around 231% in a year.
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