Univar Inc. UNVR is set to release third-quarter 2015 results before the opening bell, on Nov 3.
Univar is a global distributor of chemicals and innovative services, offering solvents, resins, pigments, acids, bases, surfactants, glycols, inorganic compounds and alcohols. It also offers transportation and warehousing infrastructure, chemicals and hazardous materials’ handling services. The company serves the coatings and adhesives, food, oil and gas, personal care and pharmaceutical industries.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Univar posted a net loss of $12.4 million in second-quarter 2015 compared to net income of $19.5 million in the prior-year quarter owing to after-tax expenses related to its initial public offering (“IPO”) and debt refinancing. Revenues also declined 12.3% year over year.
Further, the company witnessed lower external net sales in all of its regions mainly due to lower sales in the upstream oil and gas markets, and lower product pricing.
Univar, in Jun 2015, declared the closing of its IPO of common stock at a price of $22.00 per share. This followed the company’s pricing of IPO of 35 million shares of common stock. However, shares of the company have plunged around 35% since the closing of the IPO on Jun 23. The stock has declined 22% year to date.
The company also expects lower demand from the oil and gas markets along with unfavorable foreign currency translation to impact its operating results in the third quarter of 2015. Additionally, the company is saddled with a long-term debt of $3 billion as of Jun 30, 2015.
Earnings Whispers
Our proven model shows that Univar is unlikely to beat estimates this quarter. This is because the stock has a negative Earnings ESP and an unfavorable Zacks Rank.
Zacks ESP: Earnings ESP for Univar is currently -3.85%. This is because the Most Accurate Estimate is 25 cents, while the Zacks Consensus Estimate is pegged at 26 cents.
Zacks Rank: Univar has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Pan American Silver Corp. PAAS has an Earnings ESP of +27.27% and a Zacks Rank #3 (Hold).
Franco-Nevada Corp. FNV has an Earnings ESP of +7.69% and a Zacks Rank #3.
Koppers Holdings Inc. KOP has an Earnings ESP of +3.08% and a Zacks Rank #2 (Buy).
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