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1. Company Snapshot

1.a. Company Description

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.


The company contracts, purchases, processes, and sells flue-cured, burley, and oriental tobaccos that are primarily used in the manufacture of cigarettes; and dark air-cured tobaccos principally used in the manufacture of cigars, natural wrapped cigars and cigarillos, smokeless, and pipe tobacco products.It also provides value-added services, including blending, chemical, and physical testing of tobacco; service cutting for various manufacturers; manufacturing reconstituted leaf tobacco; just-in-time inventory management services; electronic nicotine delivery systems; and smoke testing services for customers.In addition, the company offers testing services for crop protection agents and tobacco constituents in seed, leaf, and finished products, including e-cigarette liquids and vapors; and analytical services that include chemical compound testing in finished tobacco products and mainstream smoke.


Further, it provides a various value-added manufacturing processes to produce specialty vegetable and fruit-based ingredients, as well as botanical extracts and flavorings for human and pet food markets; and recycles waste materials from tobacco production.The company was founded in 1886 and is headquartered in Richmond, Virginia.

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1.b. Last Insights on UVV

Universal Corporation's recent performance was driven by several positive factors. The company's fiscal year 2025 results showed exceptional growth, with revenue and operating income increasing on a consolidated basis. The 55th annual dividend increase, announced on May 21, 2025, indicates a commitment to returning value to shareholders. Additionally, the Science Based Target initiative (SBTi) approval of Universal's Net-Zero target underscores the company's dedication to sustainable business practices. The appointment of Fay Manolios to the Board of Directors, effective June 1, 2025, brings valuable expertise and experience to the company's leadership.

1.c. Company Highlights

2. Universal Corporation's Q3 Results: Tobacco Segment Shines Amidst Ingredients Challenges

Universal Corporation reported consolidated revenue of $861.3 million for the third quarter of fiscal 2026, a decline from $937.2 million in the same quarter last year. Operating income was $82 million, down from $104.1 million in the prior year period. Net income came in at $33.2 million, or $1.35 per share, missing analyst estimates of $1.92 per share. The company's tobacco operations segment generated solid quarterly results, driven by firm customer demand, while the ingredients operations segment faced headwinds, including higher fixed costs and market softness.

Publication Date: Feb -24

📋 Highlights
  • Tobacco Segment Performance:: Q3 revenue $861.3M vs $937.2M YoY, operating income $82M vs $104.1M, reflecting a challenging comparison to last year’s robust quarter.
  • Ingredients Segment Challenges:: Consolidated 9-month revenue $2.21B vs $2.25B YoY, with operating income $183.4M vs $190M, impacted by higher fixed costs and market softness in CPG sector.
  • Liquidity and Debt Position:: $917M liquidity (cash + credit lines) as of Dec 2025, net debt $995M vs $945M YoY, with a $250M upsized credit facility refinancing.
  • Ingredients Sales Momentum:: 7% YTD sales growth in Ingredients despite headwinds, driven by new product sales and cross-selling successes.
  • Tax Rate Guidance:: Estimated 2026 tax rate of 28–32%, slightly elevated due to tax law changes in certain jurisdictions.

Tobacco Segment Performance

The tobacco segment reported revenue of $676 million, with operating income of $65 million. The business benefited from strong demand and higher sales prices, although the comparison to the prior year's robust quarter was challenging. As Preston Wigner noted, "Last year's third quarter was really robust... We had very strong demand in the undersupply market last year." The segment's performance was a bright spot in the company's overall results.

Ingredients Segment Challenges

In contrast, the ingredients operations segment faced significant headwinds, including higher fixed costs and market softness. Revenue was $185 million, with operating income of $17 million. The segment's margins were compressed due to the increased costs and challenging market conditions. As Preston Wigner stated, "We continue to try to absorb those costs, which are impacting our margins and impacting our earnings."

Valuation and Outlook

Universal Corporation's valuation metrics provide some insight into the market's expectations. The company's P/E Ratio is 15.72, with a Dividend Yield of 6.11%. The EV/EBITDA ratio is 8.33, indicating a relatively reasonable valuation. Analysts estimate revenue growth of 0.1% for the next year, suggesting a stable outlook. However, the company's ingredients segment challenges and the transition to an oversupply environment in the tobacco market may impact future performance.

Liquidity and Capital Structure

Universal Corporation's liquidity position remains strong, with $917 million in available liquidity as of December 31, 2025. The company's net debt was $995 million, up from $945 million at the same point last year. The refinancing of the senior unsecured credit facility and the upsizing of the facility by $250 million have enhanced the company's financial flexibility and positioned it for long-term success.

3. NewsRoom

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GROUP BNP PARIBAS: Release of the English version of the Universal Registration Document and Annual Financial Report 2025

Mar -19

Source: globenewswire.com

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Universal Robots and Scale AI Launch Imitation Learning System to Accelerate AI Model Training, Bridging the ‘Lab-to-Factory' Gap

Mar -16

Source: businesswire.com

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Universal Logistics Holdings, Inc. Reports Fourth Quarter 2025 Financial Results; Declares Dividend

Mar -13

Source: prnewswire.com

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Universal Electronics Reports Fourth Quarter and Year-End 2025 Financial Results

Mar -12

Source: businesswire.com

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A Universal Technical Institute Director Dumped 10,000 Company Shares. Is the Stock a Buy or Sell?

Mar -12

Source: fool.com

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Universal Music Group N.V. (UNVGY) Presents at BNP Paribas Exane TMT Conference Transcript

Mar -11

Source: seekingalpha.com

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Can Universal Health's $835M Acquisition of Talkspace Accelerate Growth?

Mar -10

Source: zacks.com

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Atos Group - Availability of the Universal Registration Document 2025

Mar -10

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.49%)

6. Segments

Tobacco

Expected Growth: 8%

Universal Corporation's 8% growth in Tobacco segment is driven by increasing demand for smokeless tobacco products, expansion in emerging markets, and strategic acquisitions. Additionally, the company's focus on cost savings initiatives and productivity enhancements has improved operating efficiency, contributing to the growth.

Ingredients

Expected Growth: 12%

Universal Corporation's 12% growth in ingredients is driven by increasing demand for natural and organic products, expansion into emerging markets, and strategic acquisitions. Additionally, the company's focus on sustainability and innovation in tobacco-free nicotine products contributes to its growth momentum.

7. Detailed Products

Tobacco

Universal Corporation is a leading global tobacco leaf supplier, providing high-quality tobacco to manufacturers of cigarettes and other tobacco products.

E-Liquids

Universal Corporation offers a range of e-liquids for use in electronic cigarettes and vaping devices.

Plant-Based Ingredients

Universal Corporation provides plant-based ingredients for use in food, beverage, and pharmaceutical applications.

Recyclable Materials

Universal Corporation offers recyclable materials for use in packaging and other industrial applications.

Agricultural Products

Universal Corporation provides agricultural products, including seeds, fertilizers, and crop protection products.

8. Universal Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Universal Corporation is moderate, as there are some alternatives available in the market, but they are not very attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers is high, as they have many options available and can easily switch to competitors if they are not satisfied with the products or services of Universal Corporation.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low, as Universal Corporation is a large company and has many suppliers to choose from, giving it the upper hand in negotiations.

Threat Of New Entrants

The threat of new entrants is moderate, as there are some barriers to entry in the industry, but it is still possible for new companies to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high, as there are many competitors in the industry and they are all competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.10%
Debt Cost 7.68%
Equity Weight 57.90%
Equity Cost 7.77%
WACC 7.73%
Leverage 72.71%

11. Quality Control: Universal Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Altria

A-Score: 7.6/10

Value: 6.8

Growth: 5.8

Quality: 6.5

Yield: 10.0

Momentum: 7.0

Volatility: 9.7

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Universal

A-Score: 7.0/10

Value: 8.2

Growth: 5.9

Quality: 4.2

Yield: 10.0

Momentum: 5.0

Volatility: 9.0

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CHS

A-Score: 6.7/10

Value: 6.3

Growth: 5.2

Quality: 3.6

Yield: 10.0

Momentum: 5.0

Volatility: 10.0

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Value: 7.9

Growth: 4.9

Quality: 4.7

Yield: 7.0

Momentum: 7.5

Volatility: 7.7

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Vector

A-Score: 5.4/10

Value: 7.3

Growth: 5.3

Quality: 6.0

Yield: 5.0

Momentum: 6.0

Volatility: 3.0

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Turning Point Brands

A-Score: 4.8/10

Value: 1.2

Growth: 5.6

Quality: 6.9

Yield: 0.0

Momentum: 10.0

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

50.92$

Current Price

50.92$

Potential

-0.00%

Expected Cash-Flows