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What's in Cards for Univar (UNVR) this Earnings Season?

Univar Inc. UNVR is slated to release second-quarter 2017 results ahead of the bell on Aug 4.

The chemical company logged a profit (on a reported basis) of $22.6 million or 16 cents per share in first-quarter 2017, up around 61% from a profit of $14 million or 10 cents per share a year ago. Barring one-time items, earnings came in at 19 cents per share in the quarter, missing the Zacks Consensus Estimate of 22 cents.

The company’s revenues were essentially flat year over year at $1,998.8 million in the quarter as lower volumes were offset by increased selling prices. Sales beat the Zacks Consensus Estimate of $1,933 million.

The company has topped the earnings estimate in two of the trailing four quarters, while missing in the other two with an average positive surprise of 15.26%.

Shares of Univar have moved up 1.5% in the last three months, underperforming the industry’s 5% gain.

Can the company surprise investors or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Factors at Play

Univar, in its first-quarter earnings call, said that it will remain focused on executing its growth and productivity plans. The company sees mid-single digit growth in adjusted EBITDA in first-half 2017 and expects to deliver mid-to-high single digit growth in adjusted EBITDA for the full year. For second-quarter 2017, Univar expects adjusted EBITDA growth of mid-single digits from prior-year quarter figure of $148.2 million. The company is expected to continue to gain from its margin management and productivity initiatives.

In the first quarter, revenues from the company’s USA division fell around 3% year over year to $1.2 billion in the reported quarter, affected by reduced volumes that more than offset improved pricing.

Sales from the Rest of World unit dipped 0.5% to $100.9 million as softer demand in Mexico and sluggish economic conditions in Brazil more the offset higher pricing. Gross profit fell around 8% to $18.9 million, hurt by weak economic conditions in Mexico.

However, revenues from the Canada segment went up around 13% to $307.3 million, driven by increased sales in the Western Canada oil and gas market. Gross profit also rose roughly 10% to $55.8 million on higher sales.

The EMEA segment recorded sales of $439.7 million, up 0.5%, helped by higher selling prices. Gross profit rose around 6% to $101.8 million, supported by favorable market mix.

In May, Univar outlined its long-term growth strategy and financial targets. The company announced that operational excellence, commercial greatness and “one Univar”, will spur sustainable growth.

According to Univar, the company is well-poised to create significant value through three powerful growth pathways that include increased market share, improved margins and market expansion. It is also focused on increasing value for its supplier partners, customers and shareholders.   

Univar Inc. Price and EPS Surprise

 

Univar Inc. Price and EPS Surprise | Univar Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Univar is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Univar is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 31 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Univar currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some other companies in the basic materials space you can consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

The Chemours Company CC has an Earnings ESP of +4.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axalta Coating Systems Ltd. AXTA has an Earnings ESP of +5.26% and carries a Zacks Rank #2.

Endeavour Silver Corporation EXK has an Earnings ESP of +100.00% and a Zacks Rank #3.

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Chemours Company (The) (CC): Free Stock Analysis Report
 
Univar Inc. (UNVR): Free Stock Analysis Report
 
Axalta Coating Systems Ltd. (AXTA): Free Stock Analysis Report
 
Endeavour Silver Corporation (EXK): Free Stock Analysis Report
 
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