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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 Delivers Strong Q2 FY2026 Results

Universal Corporation reported a robust financial performance in the second quarter of fiscal year 2026, with consolidated revenue rising to $1.3 billion, a $40 million increase driven by higher third-party tobacco processing volumes, accelerated current crop tobacco shipments, and increased sales volumes in the Ingredients Operations segment. Operating income also saw a significant boost, increasing by $16 million to $101 million, primarily due to a favorable product mix in the Tobacco Operations segment. The company's earnings per share (EPS) came in at $1.36, slightly beating estimates of $1.34. As Johan Kroner, Chief Financial Officer, highlighted, the company's operational execution was strong, with a favorable product mix contributing to the improved operating income.

Publication Date: Nov -16

📋 Highlights
  • Revenue Growth:: Consolidated revenue increased $40M to $1.3B, driven by higher third-party tobacco processing and Ingredients sales.
  • Operating Income:: Operating income rose $16M to $101M, fueled by favorable Tobacco segment product mix.
  • Tobacco Prices & Supply:: Green tobacco prices softened in key regions, with crop sizes up and expected oversupply by year-end.
  • Uncommitted Inventory:: Global uncommitted leaf inventory rose to 101M kilos (vs. 76M in June), attributed to large crops.
  • Ingredients Momentum:: Segment sales and volume grew YoY, with active pipeline for new value-added products.

Segment Performance

The Tobacco Operations segment saw green tobacco prices soften in certain regions compared to the prior fiscal year, but customer demand remained firm, and shipments are progressing smoothly. The company is shipping tobacco earlier than last year and expects the tobacco market to move into an oversupply position by year-end. In the Ingredients Operations segment, the company maintained positive momentum with higher sales and volume in the quarter and 6-month period ended September 30, driven by growing interest in new value-added products.

Valuation and Outlook

With a P/E Ratio of 11.87 and an EV/EBITDA of 7.86, the company's valuation appears reasonable. Additionally, the Dividend Yield stands at 6.16%, indicating a relatively attractive return for investors. However, analysts estimate next year's revenue growth at -83.6%, which may be a concern. Preston Wigner's confidence in the company's ability to navigate the expected shift to an oversupply environment and its focus on delivering long-term value, operational efficiency, and environmental stewardship are positive indicators for future performance.

Operational Highlights

The company is making progress in its Ingredients Operations segment, with a growing pipeline of new value-added products. Preston Wigner noted that the current environment does factor into the conversion pace for customers, but the company is cautiously optimistic about the second half of the year. The Tobacco Operations segment is also performing well, with a significant increase in worldwide uncommitted leaf inventory to 101 million kilos as of September 30, attributed to large crops.

3. NewsRoom

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UNIVERSAL HEALTH SERVICES INVESTOR ALERT: Scott+Scott Attorneys at Law LLP Investigates Universal Health Services's Directors and Officers for Breach of Fiduciary Duties – UHS

Dec -04

Source: businesswire.com

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Universal Display Corporation Earns Spot on Newsweek's America's Most Responsible Companies 2026 List

Dec -03

Source: businesswire.com

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Universal Ibogaine advises further on application for Management Cease Trade Order

Dec -03

Source: thenewswire.com

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Universal Technical Institute, Inc. CEO Jerome Grant Testifies Before House Committee on Veterans' Affairs Subcommittee on Economic Opportunity

Dec -02

Source: prnewswire.com

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Need Help with Your Electric Bill? JCP&L Makes it Easy to Apply for the Universal Service Fund

Dec -01

Source: prnewswire.com

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Universal Ibogaine Advises of Filing Application for Management Cease Trade Order

Nov -25

Source: thenewswire.com

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UVV vs. BTI: Which Stock Is the Better Value Option?

Nov -25

Source: zacks.com

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4 Low-Beta Defensive Stocks to Buy as Consumer Sentiment Plummets

Nov -25

Source: zacks.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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Growth: 5.8

Quality: 7.5

Yield: 10.0

Momentum: 8.5

Volatility: 9.7

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Universal

A-Score: 7.2/10

Value: 7.8

Growth: 5.9

Quality: 4.0

Yield: 10.0

Momentum: 7.0

Volatility: 8.7

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CHS

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Value: 6.2

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Quality: 3.6

Yield: 10.0

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Volatility: 10.0

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Vector

A-Score: 4.9/10

Value: 5.1

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Quality: 6.0

Yield: 5.0

Momentum: 5.0

Volatility: 3.0

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A-Score: 4.8/10

Value: 1.9

Growth: 5.6

Quality: 6.4

Yield: 0.0

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Volatility: 5.0

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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

52.52$

Current Price

52.52$

Potential

-0.00%

Expected Cash-Flows