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Why Innospec (IOSP) is Worth Adding to Your Portfolio Now

Zacks Equity Research

Innospec Inc.’s IOSP stock looks promising at the moment. The company has seen its shares shot up around 33% year to date.

Innospec currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let's see what makes this chemical company a compelling investment option at the moment.

An Outperformer

Innospec has significantly outperformed the industry it belongs to over a year. The company’s shares have gained 8.5% compared with a roughly 31% decline recorded by the industry. The company has also outpaced the S&P 500’s rise of 4.5% for the same period.



 

Estimates Northbound

Earnings estimate revisions have the greatest impact on stock prices. Estimates for 2019 for Innospec have moved up over the past three months. Over this period, the Zacks Consensus Estimate for the year has increased by around 8.4%. The Zacks Consensus Estimate for earnings for 2019 is currently pegged at $5.15 per share, reflecting an expected year-over-year growth of 6.6%.

Positive Earnings Surprise History

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 9.1%.

Superior Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Innospec is 14.9%, above the industry’s level of 9.9%.

Growth Drivers in Place

Innospec’s adjusted earnings of $1.25 per share for first-quarter 2019 rose from $1.02 per share a year ago. It also trounced the Zacks Consensus Estimate of $1.15.

The company’s revenues also went up roughly 8% year over year to $388.3 million in the quarter. Innospec saw strong growth in its Fuel Specialties and Oilfield Services segments in the quarter.

Buoyed by the strong first-quarter performance, Innospec also declared its semi-annual dividend of 50 cents per share for the first half of 2019, representing an increase of 14%.

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. It also has significant organic growth projects in its pipeline.

Innospec is also engaged in acquisition opportunities leveraging its strong balance sheet and cash flows, which the company believes will strengthen its business.

Innospec, in its first-quarter call, said that it will remain focused on organic growth to develop innovative technologies along with potential acquisition opportunities. The company continues to invest in organic growth projects. Innospec also sees attractive business prospects for the balance of 2019 and beyond.

Innospec Inc. Price and Consensus

 

Innospec Inc. Price and Consensus

Innospec Inc. price-consensus-chart | Innospec Inc. Quote

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Materion Corporation MTRN, AngloGold Ashanti Limited AU and Israel Chemicals Ltd. ICL.

Materion has an expected earnings growth rate of 23.1% for the current year and carries a Zacks Rank #1. The company’s shares have gained around 18% over the past year.

AngloGold has an expected earnings growth rate of 86.8% for the current year and carries a Zacks Rank #1. Its shares have rallied 40% in a year’s time.

Israel Chemicals has an expected earnings growth rate of 13.5% for the current year and carries a Zacks Rank #2. Its shares are up roughly 13.5% in the past year.

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Innospec Inc. (IOSP) : Free Stock Analysis Report
 
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