Ingevity (NGVT) Stock Up 21% YTD: What's Woking in Favor?
Shares of Ingevity Corporation NGVT are up around 21% so far this year. The company has also outperformed its industry’s decline of roughly 4% over the same time frame.
Ingevity, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $3.6 billion and average volume of shares traded in the last three months was around 235.3K. It has an expected long-term earnings per share growth rate of 12%.
Let’s take a look into the factors that are driving this chemical maker.
What’s Driving NGVT?
Forecast-topping earnings performance, upbeat outlook and healthy growth prospects are contributing to the rally in Ingevity’s shares.
Ingevity has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 20.6%.
Ingevity is gaining from strong organic growth, contributions of Georgia-Pacific pine chemicals acquisition, excellent commercial and operational execution and strong productivity.
Ingevity, in its second-quarter call, said that it remains optimistic about 2018 as it is witnessing the benefits of improving market conditions for its basic materials and high-value added technologies. The company increased the mid-point and narrowed the range for its 2018 guidance for adjusted EBITDA to $302-$314 million from $293-$307 million. The company also backed its sales guidance of between $1.10 billion and $1.13 billion for the year.
The company is well poised to gain from its buyout of Georgia-Pacific’s pine chemicals business. The acquisition contributed to strong growth in sales of the Performance Chemicals division in the second quarter. The acquisition is expected to create net synergies of roughly $11 million through manufacturing optimization, lower logistics costs and leveraged procurement costs.
The Performance Chemicals division should also benefit from higher adoption of tall oil fatty acid (TOFA)-based products. Healthy TOFA pricing also had positive impact on the margins of the division during first-half 2018. The company expects high margin application areas to continue gaining strength.
Annual estimates for Ingevity have also moved north over the past three months. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 7.5% to $3.72 per share. The Zacks Consensus Estimate for 2019 has also moved up 13.6% over the same timeframe to $4.67.
The Zacks Consensus Estimate for earnings for 2018 reflects an expected year-over-year growth of 44.2%. For 2019, earnings are expected to rise 25.6% year over year.
Ingevity Corporation Price and Consensus
Ingevity Corporation Price and Consensus | Ingevity Corporation Quote
Stocks to Consider
Stocks worth considering in the basic materials space include Methanex Corporation MEOH, KMG Chemicals, Inc. KMG and Nutrien Ltd. NTR.
Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 10% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5% and sports a Zacks Rank #2 (Buy). The company’s shares are up roughly 12% over the past six months.
Nutrien has an expected long-term earnings growth rate of 14% and carries a Zacks Rank #2. The company’s shares have gained around 14% over the past six months.
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