UVV

How does Universal's profit margin and cash conversion cycle this quarter compare to its historical performance and industry peers?

Created August 06, 2025 at 08:26 PM

Answer

The press release you quoted does not include the specific figures needed to evaluate Universal Corporation’s (UVV) profit margin or cash‑conversion cycle (CCC) for the quarter ended 30 June 2025. It only highlights that the company had a “good start” to fiscal 2026 and that the Tobacco Operations segment benefited from a “favorable product mix.”

Because the actual numbers are missing, we can’t calculate a precise comparison to:

Universal’s own historical performance (e.g., prior quarters or the same quarter in FY 2025), or
Industry peers (other B2B agriproducts or tobacco‑related companies).

Below is a framework you can use once the missing data are obtained, together with the typical sources where those data are disclosed.

1. What to Look For

Metric	Definition	Why It Matters	Typical Sources
Profit margin (usually reported as gross margin, operating margin, and net margin)	Gross margin = (Revenue – Cost of Goods Sold) ÷ Revenue. Operating margin = Operating Income ÷ Revenue. Net margin = Net Income ÷ Revenue.	Shows how efficiently the company turns sales into profit. A rising margin signals better pricing power, cost control, or a more favorable product mix (as mentioned for Tobacco Operations).	Quarterly earnings release (often a “Management Discussion & Analysis” section), Form 10‑Q, investor presentation slides, Bloomberg/FactSet data.
Cash‑Conversion Cycle (CCC)	CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) – Days Payables Outstanding (DPO). It measures the number of days cash is tied up in the operating cycle.	A shorter CCC indicates the company is converting sales into cash more quickly, which can improve liquidity and reduce financing needs.	SEC filings (10‑Q), company’s “Liquidity & Capital Resources” commentary, analyst reports, S&P Capital IQ, Bloomberg.

2. How to Benchmark

A. Historical Benchmark (Universal’s own track record)

Gather past quarterly data – pull the profit‑margin percentages and CCC values for at least the last 4–8 quarters (e.g., Q1 FY 2025, Q4 FY 2025, etc.).
Identify trends –
- Margin trend: Is the margin expanding, flat, or compressing?
- CCC trend: Is the cycle shortening (improved cash flow) or lengthening (potential inventory or receivable build‑up)?
Contextualize the “favorable product mix” – If the Tobacco Operations segment now sells higher‑margin products, you would expect the gross and possibly operating margin to rise relative to prior quarters.

B. Industry‑Peer Benchmark

Select comparable peers – Companies that are also B2B agriproducts providers or have a sizable tobacco‑related business (e.g., Altria, Reynolds American, Bunge, Archer Daniels Midland, Corteva).
Collect the same metrics for those peers for the same calendar quarter (Q1 2025).
Compare –
- Margin: Is Universal’s margin above, near, or below the peer median?
- CCC: Does Universal’s CCC sit on the low‑end (faster cash conversion) or high‑end (slower) of the peer range?

C. Interpretation Scenarios (once data are available)

Scenario	What it would suggest about Universal
Margins higher than historical average and above peer median	The “favorable product mix” is translating into real pricing or cost‑advantage gains; the company may be gaining market share or leveraging higher‑margin SKUs.
Margins higher than historical but still below peers	Universal is improving, but peers may have even stronger pricing power or lower cost structures. Management may still have room to close the gap.
CCC shorter than historical and below peers	The firm is tightening working‑capital management (e.g., better inventory turnover, faster collections, or extended payables). This can boost free‑cash‑flow generation.
CCC longer than historical and above peers	Cash is tied up longer—perhaps due to inventory build‑up for the new product mix, longer credit terms to customers, or slower receivable collection. Management may need to address working‑capital efficiency.

3. Where to Find the Missing Numbers

SEC Filings – Universal’s Form 10‑Q for the quarter (filed within 45 days of the quarter end) will contain:
- A Consolidated Statements of Operations (for margins).
- A Balance Sheet and Notes that disclose inventory, accounts receivable, and accounts payable—the raw data needed to compute DIO, DSO, and DPO for the CCC.
Investor Presentation / Earnings Call Transcript – Companies often provide a slide with “Key Financial Metrics” that includes margin percentages and sometimes a “Cash‑Conversion Cycle” metric.
Financial Data Platforms – Bloomberg, FactSet, S&P Capital IQ, or Thomson Reuters can pull the calculated CCC and margin figures for both Universal and its peers.
Analyst Reports – Brokerage research notes (e.g., from Goldman Sachs, Morgan Stanley) frequently comment on margin trends and working‑capital efficiency in their “Financial Highlights” section.

4. Quick Take‑away (Given the Current Information)

Profit margin: The press release only tells us that the Tobacco Operations segment performed better because of a “favorable product mix.” A more favorable mix typically improves gross margin (higher‑margin products) and can also lift operating margin if cost structures stay stable. However, without the actual margin percentages, we cannot quantify the improvement or compare it to past quarters or peers.
Cash‑conversion cycle: No data on inventory, receivables, or payables are provided, so we cannot assess whether cash is being turned over faster or slower than historically or relative to the industry.

Bottom line: To answer the question definitively, you’ll need to retrieve Universal’s detailed quarterly financial statements (Form 10‑Q) or a full earnings release that includes the margin and working‑capital metrics. Once those numbers are in hand, apply the benchmarking framework above to gauge performance against the company’s own history and its industry set.

Suggested Next Steps

Download Universal’s latest Form 10‑Q (likely filed in early August 2025).
Extract:
- Revenue, COGS, Operating Income, Net Income → compute gross, operating, and net margins.
- Inventory, Accounts Receivable, Accounts Payable balances → calculate DIO, DSO, DPO and the CCC.
Pull comparable data for 3–5 peer companies for the same quarter.
Create a side‑by‑side table (e.g., Q1 FY 2026 vs. Q1 FY 2025 vs. peer median).
Interpret using the scenarios outlined above, and note any management commentary that explains deviations (e.g., supply‑chain disruptions, credit‑policy changes, product‑mix shifts).

If you can provide the actual margin and CCC figures (or a link to the full earnings release), I can immediately generate a precise comparative analysis.