Ingevity (NGVT) Shares Up 17% YTD: What's Working In Favor?
Zacks Investment Research | Dec 14, 2018 07:17AM ET
Shares of Ingevity Corporation (NYSE:NGVT) have shot up around 17% so far this year. The company has also outperformed its industry ’s decline of roughly 8% over the same time frame. Moreover, the stock has trounced the S&P 500’s decline of 0.8% year to date.
Ingevity, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $3.5 billion and average volume of shares traded in the last three months was around 289.2K. It has an expected long-term earnings per share growth rate of 12%.
Let’s take a look into the factors that are driving this specialty chemical company.
What’s Driving NGVT?
Sustained earnings outperformance, strong execution, cost discipline and organic and inorganic initiatives have contributed to the growth story of Ingevity. The company is gaining from strong oilfield business recovery, growth in activated carbon demand and contributions of Georgia-Pacific pine chemicals acquisition.
Ingevity has an impressive earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this timeframe, the company delivered a positive average earnings surprise of 19.8%.
Ingevity, in October, increased the mid-point and narrowed the range for its 2018 guidance for adjusted EBITDA to $306-$314 million from $302-$314 million. The company reaffirmed its sales guidance of between $1.10 billion and $1.13 billion for the year.
Earnings estimates for 2018 for Ingevity have moved north over the past two months. Over this period, the Zacks Consensus Estimate for the current year has increased by around 3.5%. The Zacks Consensus Estimate for earnings for 2018 for Ingevity is currently pegged at $3.85 per share, reflecting an expected year-over-year growth of 49.2%.
Sales growth in the oilfield industry on the back of higher U.S. drilling and production is driving revenues in the company’s Performance Chemicals division. Moreover, sustained adoption of the company’s solutions geared to meet the U.S. EPA Tier 3 and California LEV III emission regulations is contributing to the growth in the Performance Materials unit. Ingevity is poised to benefit from an expected rise in activated carbon demand on the back of the anticipated early adoption of China’s new gasoline emissions standards (the China 6 national standard) by some municipalities and regions.
Get The News You Want
Moreover, Ingevity is benefiting from its buyout of Georgia-Pacific’s pine chemicals business. The acquisition contributed to strong growth in sales of the Performance Chemicals division in the third quarter. The acquisition is expected to create net synergies of roughly $11 million through manufacturing optimization, lower logistics costs and leveraged procurement costs.
Higher adoption of tall oil fatty acid (TOFA)-based products is also benefiting the Performance Chemicals segment. Healthy TOFA pricing is also providing support to the margins of the division.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.