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Ingevity Corporation (NGVT) Up 2.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Ingevity Corporation (NGVT - Free Report) . Shares have added about 2.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ingevity Corporation due for a pullback? 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 catalysts.

Ingevity's Earnings Top Estimates in Q3, Sales Miss

Ingevity logged profits (attributable to stockholders) of $59.9 million or $1.41 per share in third-quarter 2019, up around 16% from $51.7 million or $1.16 a year ago.

Adjusted earnings per share for the reported quarter were $1.46, surpassing the Zacks Consensus Estimate of $1.42.

The company’s revenues rose roughly 16% year over year to $359.9 million in the quarter, but lagged the Zacks Consensus Estimate of $365.3 million.

Adjusted EBITDA climbed roughly 26% year over year to $114 million in the quarter. While the company faced challenges from weak market fundamentals in the quarter, it gained from its acquisition of the Capa caprolactone business.

Segment Review

Revenues from the Performance Chemicals division rose around 7% year over year to $229.7 million in the quarter. Revenues were driven by the addition of the engineered polymers product line through the Capa caprolactone acquisition.

Revenues from the Performance Materials unit climbed around 35% to $130.2 million, driven by strong sales to automotive customers in China. The growth was also supported by strong growth in sales of the company’s solutions geared to meet the U.S. and Canadian automotive emission regulations.

Balance Sheet

Ingevity ended the quarter with cash and cash equivalents of $75.6 million, up around 31% year over year. Long-term debt was $1,294.4 million, up around 74%.

Outlook

Ingevity revised its sales guidance for 2019 to between $1.28 billion and $1.30 billion from its earlier expectation of $1.30 billion and $1.36 billion. It also revised its adjusted EBITDA guidance for the year to the band of $390-$400 million from its prior view of $390-$410 million.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -10.5% due to these changes.

VGM Scores

Currently, Ingevity Corporation has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 #3 (Hold). We expect an in-line return from the stock in the next few months.


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