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Ingevity's (NGVT) Shares Rise 15% in a Year: Here's Why

Anindya Barman

Shares of Ingevity Corporation NGVT have popped around 15% over a year. The company has also outperformed its industry’s decline of roughly 11% over the same time frame.

Sustained earnings outperformance, strong execution, cost discipline and organic and inorganic initiatives have contributed to the growth story of this producer of specialty chemicals and activated carbon materials.


Ingevity, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $3.5 billion and average volume of shares traded in the last three months was around 312.6K. 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 company.

What's Working in NGVT’s Favor

Ingevity is gaining from strong oilfield business recovery, growth in activated carbon demand and significant synergy capture from Georgia-Pacific’s asset buyout.

Sales growth in the oilfield industry on the back of higher U.S. drilling and production is driving revenues in the company’s Performance Chemicals division. Moreover, sustained adoption of the company’s solutions geared to meet the U.S. EPA Tier 3 and California LEV III emission regulations is contributing to the growth in the Performance Materials unit. Ingevity is poised to benefit from an expected rise in activated carbon demand on the back of the anticipated early adoption of China’s new gasoline emissions standards (the China 6 national standard) by some municipalities and regions.

Moreover, Ingevity is benefiting 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 third quarter. The acquisition is expected to create net synergies of roughly $11 million through manufacturing optimization, lower logistics costs and leveraged procurement costs.

Higher adoption of tall oil fatty acid (TOFA)-based products is also benefiting the Performance Chemicals segment. Healthy TOFA pricing is also providing support to the margins of the division.

The company also has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this timeframe, the company delivered a positive average earnings surprise of 19.8%.

The trend in earnings estimate revisions also indicates a solid earnings outlook for Ingevity. Over the past two months, the Zacks Consensus Estimate for 2018 for Ingevity has increased by around 1.6%. The same for fourth-quarter 2018 also rose 8.3%.

The Zacks Consensus Estimate for earnings for 2018 is currently pegged at $3.85 per share, reflecting an expected year-over-year growth of 49.2%. Earnings are also expected to register a 73.3% growth in the fourth quarter.

Ingevity Corporation Price and Consensus


Ingevity Corporation Price and Consensus | Ingevity Corporation Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Quaker Chemical Corporation KWR, Israel Chemicals Ltd. ICL and Cameco Corporation CCJ.

Quaker Chemical has an expected earnings growth rate of 21.1% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have gained 18% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 2.7% for the current year and carries a Zacks Rank #2. The company’s shares have rallied 39% over the past year.

Cameco has an expected earnings growth rate of 20% for the current year and carries a Zacks Rank #2. The company’s shares have gained 16% in the past year.
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