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Innophos Holdings (IPHS) Stock Up 15% in 3 Months: Here's Why

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Shares of Innophos Holdings, Inc. (IPHS - Free Report) have gained around 15% over the last three months. The company has also outperformed its industry’s gain of roughly 8.9% to over the same time frame.  

Innophos, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $963 million and average volume of shares traded in the last three months is around 99.3K. Innophos has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 13.1%.

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



 

Driving Factors

Strong second-quarter 2017 results, healthy outlook and upbeat prospects stemming from Novel Ingredients acquisition have provided a boost to Innophos’ shares. The company delivered a positive earnings surprise of 9.6% in the second quarter.

Innophos expects earnings in the third quarter to be positively impacted (on a sequential comparison basis) by cost savings from Phase 2 operational excellence and reduced implementation fees. The company expects to realize $5 million of the identified $13 million Phase 2 operational excellence cost savings in second-half 2017. The company should also gain from favorable sales volume trends in the second half.

Innophos remains actively focused on cost savings which is driving its margins, as witnessed in the second quarter. The company also remains committed to improve productivity.

Moreover, the acquisition of Novel Ingredients, a provider of dietary supplement ingredient solutions, has offered a compelling opportunity. The acquisition reinforces Innophos’ position as a leading provider of vital ingredient solutions by combining technological capabilities and expanding product portfolio. The buyout will also help the company to develop innovative ingredient solutions more effectively and serve customers in a better way.

The acquisition also expands Innophos' portfolio in the high-growth nutrition end markets and creates a $0.5 billion Food, Health and Nutrition (FHN) platform, which represents roughly 60% of revenues for the combined entity.

Innophos expects the acquisition to be accretive to its earnings per share in the first year following the completion of the transaction and create significant value for shareholders and customers in the long term.

Stocks to Consider

Stocks in the basic materials space worth considering include Ingevity Corporation (NGVT - Free Report) , The Chemours Company (CC - Free Report) and FMC Corporation (FMC - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has expected long-term earnings growth of 12%.

Chemours has expected long-term earnings growth of 15.5%.

FMC has expected earnings growth of 11.3% for the current year.

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