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Innospec (IOSP) Shares Up 35% YTD: What's Behind the Rally?

Zacks Equity Research

Shares of Innospec Inc. IOSP have shot up 35% so far this year. The company has also significantly outperformed its industry’s rise of roughly 6% over the same time frame.

Innospec, a Zacks Rank #1 (Strong Buy) stock, has a market cap of roughly $2.1 billion and average volume of shares traded in the last three months was around 95.3K.


 

Let’s take a look into the factors that are driving this chemical maker.

What’s Working in IOSP’s Favor?

Solid fourth-quarter results and upbeat prospects have contributed to the run-up in the company’s shares. 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, aided by the company’s actions to manage costs. It also topped the Zacks Consensus Estimate of $1.35.

Revenues also 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 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%.

Moreover, 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%.

Innospec, 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 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.

Innospec Inc. Price and Consensus

 

Innospec Inc. Price and Consensus | Innospec Inc. Quote

Stocks to Consider

Stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Ingevity Corporation NGVT and Israel Chemicals Ltd. ICL. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 surged around 95% in the past year.  

Ingevity has an expected earnings growth rate of 17.9% for the current year and carries a Zacks Rank #1. Its shares have rallied roughly 48% 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 (Buy). The company’s shares have gained around 25% over the past year.  

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

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See Stocks Today >>
 


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Innospec Inc. (IOSP) : Free Stock Analysis Report
 
Ingevity Corporation (NGVT) : Free Stock Analysis Report
 
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