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Why Should You Add Innospec (IOSP) Stock to Your Portfolio?
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Innospec Inc.’s (IOSP - Free Report) stock looks promising at the moment. 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 Zacks Rank #2 (Buy) stock an attractive investment option at the moment.
Upbeat Prospects
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. The company, in its third-quarter call, also said that it will remain focused on key actions to further boost cash generation in the final quarter of 2018.
The company saw higher revenues across its Fuel Specialties and Performance Chemicals segments in the last reported quarter driven by higher volumes and positive price/mix impact. Moreover, increased customer activity, higher volumes and favorable price/mix led to a double-digit sales growth in its Oilfield Services division in the quarter. The company also witnessed higher operating income across these segments.
Innospec also remains committed to return value to shareholders. It declared a semi-annual dividend of 45 cents per share for second-half 2018. This equates to an annual dividend to 89 cents per share, a 15% increase over 2017. The company’s board also cleared the buyback of up to $100 million of Innospec stock over the next three years.
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 10.5%.
Estimates Going Up
Earnings estimate revisions have the greatest impact on stock prices. Estimates for 2018 for Innospec have moved up over the past two months. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 4.6%. The same for fourth-quarter 2018 also rose 2.3%.
Attractive Valuation
Valuation looks attractive as Innospec’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Innospec is currently trading at trailing 12-month EV/EBITDA multiple of 6.8, cheaper compared with the industry average of 7.8.
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%, above the industry’s level of 10.5%.
Mosaic has expected long-term earnings growth rate of 7%. Its shares have gained 10% in the past year.
Israel Chemicals has expected long-term earnings growth rate of 9.5%. The company’s shares have rallied 39% over the past year.
Ingevity has expected long-term earnings growth rate of 12%. The company’s shares have gained 18% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Why Should You Add Innospec (IOSP) Stock to Your Portfolio?
Innospec Inc.’s (IOSP - Free Report) stock looks promising at the moment. 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 Zacks Rank #2 (Buy) stock an attractive investment option at the moment.
Upbeat Prospects
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. The company, in its third-quarter call, also said that it will remain focused on key actions to further boost cash generation in the final quarter of 2018.
The company saw higher revenues across its Fuel Specialties and Performance Chemicals segments in the last reported quarter driven by higher volumes and positive price/mix impact. Moreover, increased customer activity, higher volumes and favorable price/mix led to a double-digit sales growth in its Oilfield Services division in the quarter. The company also witnessed higher operating income across these segments.
Innospec also remains committed to return value to shareholders. It declared a semi-annual dividend of 45 cents per share for second-half 2018. This equates to an annual dividend to 89 cents per share, a 15% increase over 2017. The company’s board also cleared the buyback of up to $100 million of Innospec stock over the next three years.
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 10.5%.
Estimates Going Up
Earnings estimate revisions have the greatest impact on stock prices. Estimates for 2018 for Innospec have moved up over the past two months. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 4.6%. The same for fourth-quarter 2018 also rose 2.3%.
Attractive Valuation
Valuation looks attractive as Innospec’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Innospec is currently trading at trailing 12-month EV/EBITDA multiple of 6.8, cheaper compared with the industry average of 7.8.
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%, above the industry’s level of 10.5%.
Innospec Inc. Price and Consensus
Innospec Inc. Price and Consensus | Innospec Inc. Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , Israel Chemicals Ltd. (ICL - Free Report) and Ingevity Corporation (NGVT - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mosaic has expected long-term earnings growth rate of 7%. Its shares have gained 10% in the past year.
Israel Chemicals has expected long-term earnings growth rate of 9.5%. The company’s shares have rallied 39% over the past year.
Ingevity has expected long-term earnings growth rate of 12%. The company’s shares have gained 18% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>