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What Should Investors Know About Ingevity Corporation's (NYSE:NGVT) Future?

Simply Wall St

Ingevity Corporation's (NYSE:NGVT) latest earnings update in December 2018 confirmed that the company gained from a strong tailwind, leading to a double-digit earnings growth of 34%. Below, I've laid out key growth figures on how market analysts perceive Ingevity's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Ingevity

Market analysts' prospects for the coming year seems positive, with earnings climbing by a robust 22%. This growth seems to continue into the following year with rates reaching double digit 52% compared to today’s earnings, and finally hitting US$277m by 2022.

NYSE:NGVT Past and Future Earnings, April 23rd 2019

While it’s useful to be aware of the rate of growth each year relative to today’s level, it may be more insightful to gauge the rate at which the business is growing on average every year. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of Ingevity's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 18%. This means, we can expect Ingevity will grow its earnings by 18% every year for the next few years.

Next Steps:

For Ingevity, I've put together three important aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is NGVT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NGVT is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NGVT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.