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Here's Why Innospec (IOSP) Should Be in Your Portfolio Now

Anindya Barman

Innospec Inc.’s IOSP stock looks promising at the moment. The company has seen its shares shot up around 34% year to date.

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.

Innospec currently has a Zacks Rank #1 (Strong 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 or #2 (Buy), offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let's see what makes this chemical company a compelling investment option at the moment.

Price Performance

Innospec has outperformed the industry it belongs to over the past year. The company’s shares have gained 17.6% compared with roughly 15.2% decline recorded by the industry. The company has also outpaced the S&P 500’s gain of 4.3% for the same period.



 

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 roughly 8%.

Estimates Going Up

Earnings estimate revisions have the greatest impact on stock prices. Estimates for 2019 for Innospec have moved up over the past two months. Over this period, the Zacks Consensus Estimate for the year has increased by around 5.3%. The Zacks Consensus Estimate for earnings for 2019 is currently pegged at $5.00 per share, reflecting an expected year-over-year growth of 3.5%.

Superior Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Innospec is 14.3%, above the industry’s level of 10.4%.

Strong Q4 and Upbeat Prospects

Innospec swung to a profit of $20.4 million or 83 cents per share in the fourth quarter from a loss of $4.8 million or 20 cents in the year-ago quarter.

Adjusted earnings of $1.62 per share for the quarter were up from $1.47 per share a year ago. It also exceeded the Zacks Consensus Estimate of $1.35. The results were aided by the company’s actions to manage costs.

The company’s revenues went up roughly 12% year over year to $395 million in the quarter. The company saw strong growth in its Fuel Specialties and Oilfield Services units.

Innospec is gaining from its balanced portfolio and strategic focus on major end markets. The company remains focused on growing sales and improving margins and is also looking to improve the effectiveness of its operations.

Innospec is also engaged in acquisition opportunities leveraging its strong balance sheet and cash flows, which the company believes will strengthen its business. The company’s net cash from operating activities jumped around 47% year over year to $69.8 million in the fourth quarter.

The company, in its fourth-quarter call, said that it has several significant organic growth options that along with potential acquisition opportunities will deliver further value for its shareholders. The company believes that it can continue to deliver positive growth in 2019 amid tough challenges driven by the instability in the geopolitical environment.

Innospec Inc. Price and Consensus

 

Innospec Inc. Price and Consensus | Innospec Inc. Quote

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Israel Chemicals Ltd. ICL and W. R. Grace & Co. GRA.

Kirkland Lake Gold has an expected earnings growth rate of 47.1% for the current year and carries a Zacks Rank #1. Its shares have shot up around 123% in the past year.  

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2. The company’s shares have gained around 24% over the past year.  

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2. Its shares have gained roughly 20% in the past year.

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Innospec Inc. (IOSP) : Free Stock Analysis Report
 
Israel Chemicals Shs (ICL) : Free Stock Analysis Report
 
W.R. Grace & Co. (GRA) : Free Stock Analysis Report
 
Kirkland Lake Gold Ltd. (KL) : Free Stock Analysis Report
 
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