Is ON Semiconductor Corp. (ON) a Great Value Stock Right Now?
Innospec Inc.’s IOSP stock looks promising at the moment. With strong fundamentals and upbeat prospects, this Zacks Rank #2 (Buy) stock can be a solid bet now.
Let’s delve deeper into the factors that make this chemical company an attractive investment option.
What's Working in Favor of Innospec?
An Outperformer: Innospec has outperformed the industry it belongs to over a year. The company’s shares have gained 16.6% compared with a roughly 11.9% rise recorded by the industry.
Positive Earnings Surprise History: Innospec has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 14.8%.
Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, Innospec is currently trading at trailing 12-month EV/EBITDA multiple of 8.6, cheaper compared with the industry average of 13.
Superior Return on Equity (ROE): Innospec’s ROE of 14.9%, as compared with the industry average of 9.3%, manifests the company’s efficiency in utilizing shareholder’s funds.
Solid Q1 and Upbeat Prospects: Innospec saw its profits jump 29% to $22.2 million or 90 cents per share in first-quarter 2018 from a profit of $17.2 million or 70 cents per share a year ago. Adjusted earnings of $1.02 per share for the quarter topped the Zacks Consensus Estimate of 98 cents.
The company's revenues went up 23% year over year to $360.7 million in the quarter, driven by sales gains across most segments. Innospec gained from higher volumes, positive price and mix as well as favorable currency impact across its Fuel Specialties and Performance Chemicals segments.
Innospec also declared its semi-annual dividend of 44 cents per share for first-half 2018, representing an increase of 15%.
The company, in its first-quarter call, said that it is seeing healthy customer activity across all of its core businesses. The company noted that it will remain focused on further improving margins in Performance Chemicals and other strategic businesses to boost profitability. Innospec also expects its margin improvement programs to deliver enhanced profitability later this year.
Innospec Inc. Price and Consensus
Innospec Inc. Price and Consensus | Innospec Inc. Quote
Other Stocks to Consider
Other top-ranked stocks in the basic materials space worth considering include The Chemours Company CC, Huntsman Corporation HUN and Celanese Corporation CE, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained roughly 19% over a year.
Huntsman has an expected long-term earnings growth rate of 8.3%. The company’s shares have rallied around 30% in a year.
Celanese has an expected long-term earnings growth rate of 31%. Its shares have rallied roughly 32% over a year.
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