Universal Corp (UVV) stock analysis

P/E against its history

Not enough price and earnings history to compare.

P/E against the industry

Needs positive earnings and enough profitable companies in the industry.

EV/EBITDA above its 5-year median

Universal's EV/EBITDA of 13.0 is above its 5-year median of 8.7.

P/B below the industry

Universal's price-to-book of 0.68 is below the Wholesale Trade-non-durable Goods median of 1.69.

Trading above fair value

The share price of $37.95 is above our fair value estimate of $34.44.

Margin of safety under 20%

The price is 10.2% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -36.0% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -102% over the last twelve months, against a 5-year average of -17.9% a year.

Growing slower than the industry

Revenue grew -9.4% over the last twelve months; the Wholesale Trade-non-durable Goods median is 3.8%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 15.2% over the last twelve months, against 18.1% a year earlier.

Return on equity under 15%

Return on equity was -0.2% over the last twelve months and averaged 6.6% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 3.5%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Universal's return on equity of -0.2% is above the Wholesale Trade-non-durable Goods median of -6.0%.

Earnings shrank over 5 years

Net income shrank 17.9% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was -0.1% over the last twelve months, against a 5-year average of 3.6%.

Net margin above the industry

Universal's net margin of -0.1% is above the Wholesale Trade-non-durable Goods median of -0.1%.

High debt

Debt is 86.1% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 47.4% five years ago to 86.1%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 7.3% of total debt; we look for at least 20%.

Interest not well covered

Operating income covers interest expense 1.6 times; we look for at least 5.

Short-term assets cover short-term debts

Current assets are 2.54 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.40; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Universal paid dividends worth 8.7% of the share price over the last twelve months.

Yield above Treasuries

The 8.7% yield is above the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Universal yields 8.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Earnings cover

Needs dividends paid and net income.

Not covered by free cash flow

Dividends take 336% of free cash flow.