Univar (UNVR) Up 25% in 3 Months: What's Driving the Stock?

Univar Solutions Inc.’s UNVR shares have popped 24.9% over the past three months. The company has also outperformed its industry’s rise of 5.7% over the same time frame. Moreover, it has topped the S&P 500’s 7.2% rise over the same period.

Let’s take a look into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

What’s Going in UNVR’s Favor?

Forecast-topping earnings performance in the first quarter, upbeat outlook and buoyant prospects from the Nexeo acquisition have contributed to the run-up in Univar’s shares. Univar’s adjusted earnings of 43 cents per share for the first quarter topped the Zacks Consensus Estimate of 32 cents.

Univar, in its first-quarter call, said that it expects an improvement in volumes on the reopening of the North America and European economies. The company now expects adjusted EBITDA for 2021 to be $680-$700 million, up from the prior view of $630-$650 million.

The company is witnessing increased demand for products in its industrial solutions business. It saw 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.

Moreover, Univar remains 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 is also progressing well with the integration of the Nexeo acquisition. The company expects to achieve annual net synergy from Nexeo of $120 million by early 2022.

Univar is also expected 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 and Consensus
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 Nucor Corporation NUE, Cabot Corporation CBT and Impala Platinum Holdings Limited IMPUY.

Nucor has a projected earnings growth rate of 285.3% for the current year. The company’s shares have surged around 130% 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 62% in the past year. It currently carries a Zacks Rank #1.

Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 161% in the past year. It currently carries a Zacks Rank #2 (Buy).

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Zacks Investment Research

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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