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Ingevity Corporation (NGVT) Down 3.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Ingevity Corporation (NGVT - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ingevity Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Ingevity Tops Earnings & Revenue Estimates in Q4

Ingevity recorded a profit (attributable to stockholders) of $42.1 million or 99 cents per share in fourth-quarter 2018, compared with $41.6 million or 97 cents a year ago. Adjusted earnings per share for the reported quarter were $1.07, which surpassed the Zacks Consensus Estimate of 78 cents.

The company’s revenues rose roughly 21% year over year to $278.6 million in the quarter, coming ahead of the Zacks Consensus Estimate of $262.4 million.

Adjusted EBITDA climbed roughly 39% year over year to $73.3 million in the quarter. The company gained from increased volumes, better price and mix, and reduced raw materials costs.

FY18 Results

For 2018, profit was $169.1 million or $3.97 per share, up roughly 34% from $126.5 million or $2.97 per share recorded in 2017.

Net sales for the year went up around 17% year over year to $1,133.6 million, aided by increased selling prices.

Segment Review

Revenues from the Performance Chemicals division jumped around 20% year over year to $166.1 million in the quarter. Revenues were driven by contributions of Georgia-Pacific pine chemicals acquisition and sales growth in oilfield industry on the back of strong U.S. drilling.

Revenues from the Performance Materials unit went up around 24% to $112.5 million. The growth was supported by sustained adoption of the company’s solutions geared to meet the U.S. EPA Tier 3 and California LEV III automotive emission regulations.

Balance Sheet

Ingevity ended 2018 with cash and cash equivalents of $77.5 million, down around 12% year over year. Long-term debt was $741.2 million, up around 67%.

Outlook

Ingevity expects sales of between $1.30 billion and $1.36 billion for 2019. Adjusted EBITDA for the year has been forecast in the band of $390 million to $410 million. The company expects revenues to increase roughly 18% and earnings to rise around 25% year over year at the mid-point of its guidance factoring in its acquisition of the Capa caprolactone business.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.06% due to these changes.

VGM Scores

Currently, Ingevity Corporation has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ingevity Corporation has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.




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