Is Univar (UNVR) Poised For A Beat This Earnings Season?

Univar Inc. (NYSE:UNVR) is slated to release first-quarter 2018 results ahead of the bell on May 10.

The chemical company logged a profit (on a reported basis) of $27 million or 19 cents per share in fourth-quarter 2017 as against a loss of $59.2 million or 43 cents a year ago. Adjusted earnings for the quarter came in at 34 cents per share in the quarter, topping the Zacks Consensus Estimate of 26 cents.

The company’s revenues rose 8.1% year over year to $1,959.2 million in the quarter, beating the Zacks Consensus Estimate of $1,849 million.

The company topped earnings estimates in three of the trailing four quarters, while missing in one with an average positive surprise of 20.8%.

Shares of Univar have gained 1.2% over a year, outperforming the industry’s 2.6% decline.

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

Factors at Play

For full-year 2018, Univar sees adjusted EBITDA growth of low-double digits and revenue growth of mid-single digit. For 2018, adjusted earnings have been forecasted in the range of $1.60-$1.80 per share. The company also expects adjusted EBITDA for first-quarter 2018 to grow around 10%.

The Zacks Consensus Estimate for revenues for Univar for the to-be-reported quarter is $2,137 billion, reflecting an increase of 6.9% from the year-ago quarter.

Net sales for Univar’s USA segment for the first quarter is projected to witness a 3% rise year over year as the Zacks Consensus Estimate for the quarter is pegged at $1,186 million. Adjusted EBITDA is expected to increase 11% year over year as the Zacks Consensus Estimate for the same is $91 million for the first quarter.

Net sales for Univar’s Canada segment for the first quarter is projected to witness a 9.8% increase year over year as the Zacks Consensus Estimate for the quarter is pegged at $337 million. Adjusted EBITDA is also expected to increase 8.1% year over year as the Zacks Consensus Estimate is $28.6 million for the first quarter.

Moreover, the Zacks Consensus Estimate for net sales for the EMEA segment stands at $499 million, reflecting an estimated 13.4% increase. Adjusted EBITDA is expected to rise 6.7% year over year as the Zacks Consensus Estimate is $38.3 million for the first quarter.

The Zacks Consensus Estimate for net sales for the Rest of the World is pegged at $101 million for the first quarter, flat year over year. Adjusted EBITDA is expected to increase 2.2% as the Zacks Consensus Estimate is $6.85 million for the first quarter.

The company believes that the initiatives to improve operating cost productivity will enable it to fund investments for technological development and the enhancement of sales force activities.

Also, Univar is working on its key initiatives — Operational Excellence, Commercial Greatness and One Univar — targeted at enhancing its profitability or return on investment. Reinvestment for core business growth, meaningful buyouts and lowering debt burden are the key features of the company’s capital allocation policy.

Univar Inc. Price and EPS Surprise

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

Earnings Whispers

Our proven model conclusively shows that Univar is likely to beat estimates this quarter because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP for Univar is currently pegged at +2.63%. This is because the Most Accurate estimate stands at 39 cents while the Zacks Consensus Estimate is 38 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 (Hold) which when combined with a positive ESP, makes us confident of an earnings beat. Note that stocks with — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 — have significantly higher chance of beating earnings estimates.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Silver Wheaton Corp (NYSE:WPM) has an Earnings ESP of +1.64% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rexnord Corporation (NYSE:RXN) has an Earnings ESP of +1.82% and carries a Zacks Rank #2.

Brady Corporation (NYSE:BRC) has an Earnings ESP of +1.03% and carries a Zacks Rank #2.

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