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UVV

Universal NYSE:UVV Stock Report

Last Price

US$51.79

Market Cap

US$1.3b

7D

-7.9%

1Y

2.4%

Updated

08 Aug, 2022

Data

Company Financials
UVV fundamental analysis
Snowflake Score
Valuation3/6
Future Growth0/6
Past Performance2/6
Financial Health3/6
Dividends5/6

UVV Stock Overview

Universal Corporation processes and supplies leaf tobacco and plant-based ingredients worldwide.

Universal Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Universal
Historical stock prices
Current Share PriceUS$51.79
52 Week HighUS$64.13
52 Week LowUS$46.24
Beta0.55
1 Month Change-2.39%
3 Month Change-10.34%
1 Year Change2.35%
3 Year Change0.27%
5 Year Change-10.86%
Change since IPO187.72%

Recent News & Updates

Aug 03

Universal Non-GAAP EPS of $0.25, revenue of $429.8M

Universal press release (NYSE:UVV): Q1 Non-GAAP EPS of $0.25. Revenue of $429.8M (+22.8% Y/Y).

Jul 20

Universal Corp. Could Be An Attractive Buy For Dividend Investors

UVV has outperformed the broader market during times of low consumer confidence three out of three times in the last 20 years. The firm pays a safe and sustainable dividend and has done so in the last 50 years. It could be an attractive option for dividend and dividend growth investors. According to the Gordon Growth Model, the firm is fairly valued. We currently rate the stock as "buy". As a result of the several macroeconomic headwinds, including rising inflation, elevated commodity prices, supply chain disruptions, COVID-19 related restrictions in China, rising interest rates, a strong U.S. Dollar, escalating geopolitical conflicts in the Eastern European region and a declining consumer confidence in the United States, the S&P 500 (SPY) has declined by about 17% since the beginning of 2022. Although many firms have lost a significant portion of their market cap, there are also numerous companies that have (so far) performed relatively well in this challenging environment. One of these companies is Universal Corporation (UVV), a firm that processes and supplies leaf tobacco and plant-based ingredients worldwide. Data by YCharts Year-to-date, UVV has significantly outperformed the broader market, as its stock price has stayed flat over the period. In this article, we will take a look at UVV's historic performance during times of low consumer confidence to gauge how the stock may perform in the current environment. Then, we will use the Gordon Growth Model to estimate fair value for UVV's stock. Performance during periods of low consumer confidence Consumer confidence is often referred to as a leading economic indicator, which can be used to predict potential changes in the consumer spending trend in the not-so-distant future. When consumer confidence is low, or declining, it signals that people may be reluctant to spend larger sums of money, due to their uncertain financial outlooks. This could potentially lead to lower demand for durable, discretionary, non-essential products. Services may also be impacted, as people likely start saving costs by choosing lower-cost alternatives. Consumer confidence in the United States has been steadily declining since the beginning of the year, caused most likely by the uncertain macroeconomic environment. Important to highlight that the current level of consumer confidence is even below levels that were observed during the financial crisis in 2008-2009. While consumer spending has remained high in the first half of 2022, we expect the low consumer confidence to result in a slowing spending eventually. U.S. Consumer confidence (Tradingeconomics.com) Firms operating in the consumer staples sector are less likely to be influenced by the fluctuating consumer confidence as the demand for their products is thought to be relatively inelastic. Let us take a closer look at how UVV's stock price has developed in the last 20 years during periods characterized by low consumer confidence. These periods are marked in red circles. 2001-2003 While the S&P500 lost more than 32% between 2001 and 2003, UVV's stock price was up by about 6%, substantially outperforming the broader market. Data by YCharts 2007-2010 Between 2007 and 2010, both the SPY and UVV ended up in negative territory, however, UVV lost only 7% of its market value, compared to the decline of 21% of the broader market. Data by YCharts 2011-2013 In this time period, the firm once again outperformed the broader market by gaining more than 22%, in contrast with the 13% gain of the SPY. Data by YCharts To sum things up, UVV has outperformed the SPY in three out of three times, in periods characterized by low consumer confidence. Although past performance is not always a reliable indicator of future performance, in our opinion, UVV is well-positioned in the current market environment to maintain its outperformance. For this reason, we believe that UVV's stock could be an attractive buy from this point of view. In the next section, we will look at the valuation of the firm and will determine the fair value of the stock. Valuation Gordon Growth Model The Gordon Growth Model ('GGM') is a simple dividend discount model, which can be applied to value the equity of dividend-paying firms. The following formula describes the mathematics behind the GGM. Gordon Growth Model (Wallstreetprep.com) Before applying the model, we have to make sure that the firm fulfills a set of criteria: The company pays a dividend Stable dividend growth is expected at a constant rate in perpetuity The firm is relatively unaffected by the business cycle fluctuations Also, a plus, if a firm has a strong track record of steadily increasing dividend payments. UVV has a strong track record of returning value to its shareholders in the form of dividend payments. The firm has been paying dividends for the last 50 years, even managing to increase the payout in each year. The current annual dividend is $3.16 per share. For this reason, we believe that the Gordon Growth Model is a suitable valuation method for this company. Dividend history (Seekingalpha.com) To determine the fair value using the GGM, two key assumptions need to be made: What is the required rate of return? For the required rate of return, we usually prefer to use the weighted average cost of capital ('WACC') of the firm. The WACC of UVV is in the range of 7% to 8.5%. WACC (Finbox.com) 2. What could be a reasonable assumption for the stable and constant dividend growth rate in perpetuity?

Shareholder Returns

UVVUS TobaccoUS Market
7D-7.9%3.8%1.1%
1Y2.4%-53.9%-13.0%

Return vs Industry: UVV exceeded the US Tobacco industry which returned -54% over the past year.

Return vs Market: UVV exceeded the US Market which returned -12.9% over the past year.

Price Volatility

Is UVV's price volatile compared to industry and market?
UVV volatility
UVV Average Weekly Movement4.6%
Tobacco Industry Average Movement15.4%
Market Average Movement7.9%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.2%

Stable Share Price: UVV is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: UVV's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
188611,250George Freemanhttps://www.universalcorp.com

Universal Corporation processes and supplies leaf tobacco and plant-based ingredients worldwide. The company operates through two segments, Tobacco Operations and Ingredients Operations. It is involved in the procuring, financing, processing, packing, storing, and shipping leaf tobacco for sale to manufacturers of consumer tobacco products.

Universal Fundamentals Summary

How do Universal's earnings and revenue compare to its market cap?
UVV fundamental statistics
Market CapUS$1.27b
Earnings (TTM)US$87.05m
Revenue (TTM)US$2.18b

14.6x

P/E Ratio

0.6x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
UVV income statement (TTM)
RevenueUS$2.18b
Cost of RevenueUS$1.74b
Gross ProfitUS$439.59m
Other ExpensesUS$352.54m
EarningsUS$87.05m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.54
Gross Margin20.13%
Net Profit Margin3.99%
Debt/Equity Ratio71.6%

How did UVV perform over the long term?

See historical performance and comparison

Dividends

6.1%

Current Dividend Yield

89%

Payout Ratio

Does UVV pay a reliable dividends?

See UVV dividend history and benchmarks
When do you need to buy UVV by to receive an upcoming dividend?
Universal dividend dates
Ex Dividend DateOct 07 2022
Dividend Pay DateNov 07 2022
Days until Ex dividend58 days
Days until Dividend pay date89 days

Does UVV pay a reliable dividends?

See UVV dividend history and benchmarks
We’ve recently updated our valuation analysis.

Valuation

Is UVV undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for UVV?

Other financial metrics that can be useful for relative valuation.

UVV key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1x
Enterprise Value/EBITDA9.8x
PEG Ration/a

Price to Earnings Ratio vs Peers

How does UVV's PE Ratio compare to its peers?

UVV PE Ratio vs Peers
The above table shows the PE ratio for UVV vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average18.8x
RLX RLX Technology
5.6x7.7%US$2.5b
VGR Vector Group
13xn/aUS$1.6b
TPB Turning Point Brands
10.8x24.5%US$448.3m
MO Altria Group
45.7x12.4%US$79.6b
UVV Universal
14.6xn/aUS$1.3b

Price-To-Earnings vs Peers: UVV is good value based on its Price-To-Earnings Ratio (14.6x) compared to the peer average (18.8x).


Price to Earnings Ratio vs Industry

How does UVV's PE Ratio compare vs other companies in the Global Tobacco Industry?

Price-To-Earnings vs Industry: UVV is expensive based on its Price-To-Earnings Ratio (14.6x) compared to the Global Tobacco industry average (10.9x)


Price to Earnings Ratio vs Fair Ratio

What is UVV's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

UVV PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio14.6x
Fair PE Ration/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate UVV's Price-To-Earnings Fair Ratio for valuation analysis.


Share Price vs Fair Value

What is the Fair Price of UVV when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: UVV ($51.79) is trading below our estimate of fair value ($71.41)

Significantly Below Fair Value: UVV is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.


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Future Growth

How is Universal forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


8.9%

Forecasted Food, Beverage & Tobacco industry annual growth in earnings

In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Universal has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Discover growth companies

  • Examine whether Universal is trading at an attractive price based on how much it is expected to earn in the future, and relative to its industry peers and the wider market.
  • Universal competitive advantages and company strategy can generally be found in its financial reports archived here.

Past Performance

How has Universal performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


4.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: UVV has high quality earnings.

Growing Profit Margin: UVV's current net profit margins (4%) are lower than last year (4.3%).


Past Earnings Growth Analysis

Earnings Trend: UVV's earnings have grown by 4.8% per year over the past 5 years.

Accelerating Growth: UVV's earnings growth over the past year (0.6%) is below its 5-year average (4.8% per year).

Earnings vs Industry: UVV earnings growth over the past year (0.6%) underperformed the Tobacco industry 7.6%.


Return on Equity

High ROE: UVV's Return on Equity (7.5%) is considered low.


Discover strong past performing companies

Financial Health

How is Universal's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: UVV's short term assets ($1.9B) exceed its short term liabilities ($742.0M).

Long Term Liabilities: UVV's short term assets ($1.9B) exceed its long term liabilities ($677.3M).


Debt to Equity History and Analysis

Debt Level: UVV's net debt to equity ratio (65.2%) is considered high.

Reducing Debt: UVV's debt to equity ratio has increased from 31.4% to 71.6% over the past 5 years.

Debt Coverage: UVV's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: UVV's interest payments on its debt are well covered by EBIT (6.4x coverage).


Balance Sheet


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Dividend

What is Universal current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


6.10%

Current Dividend Yield

Upcoming Dividend Payment

TodayAug 09 2022Ex Dividend DateOct 07 2022Dividend Pay DateNov 07 202231 days from Ex DividendBuy in the next 58 days to receive the upcoming dividend

Dividend Yield vs Market

Notable Dividend: UVV's dividend (6.1%) is higher than the bottom 25% of dividend payers in the US market (1.52%).

High Dividend: UVV's dividend (6.1%) is in the top 25% of dividend payers in the US market (4.1%)


Stability and Growth of Payments

Stable Dividend: UVV's dividends per share have been stable in the past 10 years.

Growing Dividend: UVV's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (89.1%), UVV's payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: UVV is paying a dividend but the company has no free cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

12.7yrs

Average management tenure


CEO

George Freeman (59 yo)

15.67yrs

Tenure

US$2,861,961

Compensation

Mr. George C. Freeman, III, has been Chairman of Universal Corporation since August 5, 2008. Mr. Freeman has been Chief Executive Officer of Universal Corporation since April 1, 2008. Mr. Freeman has been...


CEO Compensation Analysis

Compensation vs Market: George's total compensation ($USD2.86M) is below average for companies of similar size in the US market ($USD5.43M).

Compensation vs Earnings: George's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: UVV's management team is seasoned and experienced (12.7 years average tenure).


Board Members

Experienced Board: UVV's board of directors are considered experienced (9.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: UVV insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Universal Corporation's employee growth, exchange listings and data sources


Key Information

  • Name: Universal Corporation
  • Ticker: UVV
  • Exchange: NYSE
  • Founded: 1886
  • Industry: Tobacco
  • Sector: Food, Beverage & Tobacco
  • Implied Market Cap: US$1.274b
  • Shares outstanding: 24.59m
  • Website: https://www.universalcorp.com

Number of Employees


Location

  • Universal Corporation
  • 9201 Forest Hill Avenue
  • Richmond
  • Virginia
  • 23235
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/08 00:00
End of Day Share Price2022/08/08 00:00
Earnings2022/06/30
Annual Earnings2022/03/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.