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Here's Why Innospec (IOSP) Should Be in Your Portfolio Now

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Innospec Inc.’s (IOSP - Free Report) stock looks promising at the moment. With strong fundamentals and upbeat prospects, this Zacks Rank #2 (Buy) stock can be a solid bet now.

Let’s delve deeper into the factors that make this chemical company an attractive investment option.

What's Working in Favor of Innospec?

An Outperformer: Innospec has outperformed the industry it belongs to over the past three months. The company’s shares have gained 19.9% compared with roughly 5.9% gain recorded by the industry.



 

Positive Earnings Surprise History: Innospec has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 12.9%.

Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2017 for Innospec is currently pegged at $4.30, reflecting an expected year-over-year growth of 13.2%. Moreover, earnings are expected to register a 4.7% growth in 2018.

Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, Innospec is currently trading at trailing 12-month EV/EBITDA multiple of 9.8, cheaper compared with the industry average of 19.5.

Superior Return on Equity (ROE): Innospec’s ROE of 15.1%, as compared with the industry average of 11.2%, manifests the company’s efficiency in utilizing shareholder’s funds.

Upbeat Outlook: Innospec, in its third-quarter call, said that it is positive about the balance of 2017 and is optimistic about 2018. The company will remain focused on further improving operating margins. Innospec will also focus on developing new technologies that are closely aligned to its customers' requirements. The company also noted that strength of its balance sheet allows it to participate in acquisition projects that will create shareholder value.

Innospec is gaining from its balanced portfolio and strategic focus on major end markets. Moreover, Innospec’s new fully-owned enterprise in China, Innospec Chemical (Beijing) Co. Ltd., is expected to help to gradually extend the company’s footprint in global markets as demand for specialty chemicals continues to grow, especially in China. It will also allow the company to manage and trade inventory locally and expand business in a thriving market.

Innospec will be able to improve customer services across all businesses in China including, performance chemicals, fuel specialties and oilfield services, as it looks forward to develop profitable solutions for long-term growth.

Innospec Inc. Price and Consensus

 

Innospec Inc. Price and Consensus | Innospec Inc. Quote

Other Stocks to Consider

Other top-ranked companies in the basic materials space include Koppers Holdings Inc. (KOP - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Koppers has an expected long-term earnings growth of 18%. The stock has gained around 21% year to date.

Kronos has an expected long-term earnings growth of 5%. The stock has gained around 115% year to date.

Westlake has an expected long-term earnings growth of 10.6%. Its shares are up roughly 81% year to date.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>

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