Innospec Inc. (IOSP) Hit a 52 Week High, Can the Run Continue?
Shares of Innospec (IOSP) have been strong performers lately, with the stock up 3.6% over the past month. The stock hit a new 52-week high of $129.15 in the previous session. Innospec has gained 4.6% since the start of the year compared to the -1.7% move for the Zacks Basic Materials sector and the -2.8% return for the Zacks Chemical - Diversified industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 13, 2024, Innospec reported EPS of $1.84 versus consensus estimate of $1.59.
For the current fiscal year, Innospec is expected to post earnings of $6.72 per share on $2.03 billion in revenues. This represents a 10.34% change in EPS on a 4.06% change in revenues. For the next fiscal year, the company is expected to earn $7.34 per share on $2.12 billion in revenues. This represents a year-over-year change of 9.23% and 4.46%, respectively.
Valuation Metrics
Innospec may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Innospec has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 19.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.4X. On a trailing cash flow basis, the stock currently trades at 16.7X versus its peer group's average of 9.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Innospec currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Innospec passes the test. Thus, it seems as though Innospec shares could still be poised for more gains ahead.
How Does IOSP Stack Up to the Competition?
Shares of IOSP have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Kronos Worldwide Inc (KRO). KRO has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Kronos Worldwide Inc beat our consensus estimate by 28.57%, and for the current fiscal year, KRO is expected to post earnings of $0.33 per share on revenue of $1.98 billion.
Shares of Kronos Worldwide Inc have gained 33.4% over the past month, and currently trade at a forward P/E of 35.58X and a P/CF of 337.89X.
The Chemical - Diversified industry may rank in the bottom 76% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for IOSP and KRO, even beyond their own solid fundamental situation.
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Innospec Inc. (IOSP) : Free Stock Analysis Report
Kronos Worldwide Inc (KRO) : Free Stock Analysis Report
