Innospec Inc.’s IOSP stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this chemical company an attractive investment option.
What's Working in Favor of Innospec?
Solid Rank & VGM Score: Innospec currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
An Outperformer: Innospec has outperformed the industry it belongs to over a year. The company’s shares have gained 10.1% compared with a roughly 17.2% decline recorded by the industry.
Positive Earnings Surprise History: Innospec has outpaced the Zacks Consensus Estimate in three of the trailing four quarters. In this timeframe, the company has delivered a positive average earnings surprise of 10.5%.
Superior Return on Equity (ROE): Innospec ROE of 14%, as compared with the industry average of 10.5%, manifests the company’s efficiency in utilizing shareholder’s funds.
Strong Q3 and Upbeat Prospects: Innospec’s adjusted earnings of $1.20 per share for third-quarter 2018 rose from $1.00 per share a year ago. Earnings also trounced the Zacks Consensus Estimate of $1.02.
The company’s revenues also went up roughly 9% year over year to $363.1 million in the quarter. The top line was driven by sales gains in core businesses.
The company saw higher revenues across its Fuel Specialties and Performance Chemicals segments driven by higher volumes and positive price/mix impact. Moreover, increased customer activity, higher volumes and favorable price/mix led to a double-digit sales growth in its Oilfield Services division in the quarter. The company also witnessed higher operating income across these segments.
Innospec is gaining from its balanced portfolio and strategic focus on major end markets. The company, in its third-quarter call, said that it will remain focused on key actions to further boost cash generation in the final quarter of 2018. Innospec is also engaged in acquisition opportunities which the company believes will strengthen its business.
The company also remains committed to return value to shareholders. It declared a semi-annual dividend of 45 cents per share for second-half 2018. This equates to an annual dividend to 89 cents per share, a 15% increase over 2017. The company’s board also cleared the buyback of up to $100 million of Innospec stock over the next three years.
Innospec Inc. Price and Consensus
Innospec Inc. price-consensus-chart | Innospec Inc. Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company MOS, CF Industries Holdings, Inc. CF and Methanex Corporation MEOH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic has expected long-term earnings growth rate of 7%. Its shares have surged 59% in the past year.
CF Industries has expected long-term earnings growth rate of 6%. Its shares have rallied 32% in a year.
Methanex has expected long-term earnings growth rate of 15%. Its shares have gained 21% in the past year.
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