| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 0/6 |
| Past Performance | 2/6 |
| Financial Health | 3/6 |
| Dividends | 5/6 |
UVV Stock Overview
Universal Corporation processes and supplies leaf tobacco and plant-based ingredients worldwide.
Universal Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$51.79 |
| 52 Week High | US$64.13 |
| 52 Week Low | US$46.24 |
| Beta | 0.55 |
| 1 Month Change | -2.39% |
| 3 Month Change | -10.34% |
| 1 Year Change | 2.35% |
| 3 Year Change | 0.27% |
| 5 Year Change | -10.86% |
| Change since IPO | 187.72% |
Recent News & Updates
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).
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
| UVV | US Tobacco | US Market | |
|---|---|---|---|
| 7D | -7.9% | 3.8% | 1.1% |
| 1Y | 2.4% | -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
| UVV volatility | |
|---|---|
| UVV Average Weekly Movement | 4.6% |
| Tobacco Industry Average Movement | 15.4% |
| Market Average Movement | 7.9% |
| 10% most volatile stocks in US Market | 17.1% |
| 10% least volatile stocks in US Market | 3.2% |
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
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1886 | 11,250 | George Freeman | https://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
| UVV fundamental statistics | |
|---|---|
| Market Cap | US$1.27b |
| Earnings (TTM) | US$87.05m |
| Revenue (TTM) | US$2.18b |
14.6x
P/E Ratio0.6x
P/S RatioIs UVV overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| UVV income statement (TTM) | |
|---|---|
| Revenue | US$2.18b |
| Cost of Revenue | US$1.74b |
| Gross Profit | US$439.59m |
| Other Expenses | US$352.54m |
| Earnings | US$87.05m |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 3.54 |
| Gross Margin | 20.13% |
| Net Profit Margin | 3.99% |
| Debt/Equity Ratio | 71.6% |
How did UVV perform over the long term?
See historical performance and comparisonDividends
6.1%
Current Dividend Yield89%
Payout RatioDoes UVV pay a reliable dividends?
See UVV dividend history and benchmarks| Universal dividend dates | |
|---|---|
| Ex Dividend Date | Oct 07 2022 |
| Dividend Pay Date | Nov 07 2022 |
| Days until Ex dividend | 58 days |
| Days until Dividend pay date | 89 days |
Does UVV pay a reliable dividends?
See UVV dividend history and benchmarksValuation
Is UVV undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation 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.
| What is UVV's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$1.27b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 1x |
| Enterprise Value/EBITDA | 9.8x |
| PEG Ratio | n/a |
Price to Earnings Ratio vs Peers
How does UVV's PE Ratio compare to its peers?
| UVV PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 18.8x | ||
RLX RLX Technology | 5.6x | 7.7% | US$2.5b |
VGR Vector Group | 13x | n/a | US$1.6b |
TPB Turning Point Brands | 10.8x | 24.5% | US$448.3m |
MO Altria Group | 45.7x | 12.4% | US$79.6b |
UVV Universal | 14.6x | n/a | US$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.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 14.6x |
| Fair PE Ratio | n/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
0/6Future 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
2/6Past 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
3/6Financial 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
5/6Dividend Score 5/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
6.10%
Current Dividend Yield
Upcoming Dividend Payment
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.
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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
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/08 00:00 |
| End of Day Share Price | 2022/08/08 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2022/03/31 |
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.