Shares of Univar Solutions, Inc. (UNVR) gained 10% in the extended trading session on Monday after the company reported strong results for the third quarter of 2021. The company distributes chemicals and ingredients and provides specialty services.
Adjusted earnings stood at $0.62 per share, topping the Street’s estimates of $0.43 per share. Also, the figure compares favorably with earnings of $0.30 per share reported in the year-ago quarter. (See Univar stock charts on TipRanks)
Total revenue of $2.49 billion outpaced the consensus estimate of $2.2 billion. The company had reported revenue of $2 billion in the same quarter last year. The upside can be attributed to growth in chemical prices and elevated industrial demand.
Univar reported adjusted EBITDA margin of 8.5% up 30 basis points from 8.2% in the prior-year quarter. As of September 30, 2021, liquidity stood at $996.7 million, including cash-in-hand of $220.8 million.
Meanwhile, the company announced that its board of directors have authorized a share repurchase program of up to $500 million over the next five years. (See Insiders’ Hot Stocks on TipRanks)
The President and CEO of Univar, David Jukes, said, “Our extensive network of facilities and owned trucking fleet have provided us with a clear competitive advantage, and we are executing with a greater confidence and agility than ever before. Our priority remains to profitably grow our business by putting the customer at the center of all we do as we work to deliver enhanced shareholder value and advance our ESG agenda.”
The company expects to post adjusted EBITDA between $180 million and $190 million, up from $146.4 million in the fourth quarter of 2020. Adjusted EBITDA for 2021 is expected to be in the range of $770 million to $780 million, compared to $635.8 million in 2020.
Last month, UBS analyst Joshua Spector initiated a Buy rating on Univar with a price target to $32 (implies 22.2% upside potential).
Spector is optimistic about the company’s leading position as a North American distributor of chemical materials. He notes that UNVR further cemented this status with the acquisition of Nexeo.
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average Univar price target of $29 implies 10.8% upside potential.
Investors should always be aware of the risks involved in any stock. According to the new TipRanks’ Risk Factors tool, UNVR is at risk mainly from two factors: Finance & Corporate and Production, which contribute 32% and 25%, respectively, to the total 28 risks identified for the stock. Under the Finance & Corporate risk category, Univar has 9 risks, details of which can be found on the TipRanks website.
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