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IOSP

Innospec NasdaqGS:IOSP Stock Report

Last Price

US$99.45

Market Cap

US$2.4b

7D

4.4%

1Y

5.7%

Updated

12 Aug, 2022

Data

Company Financials +
IOSP fundamental analysis
Snowflake Score
Valuation2/6
Future Growth3/6
Past Performance5/6
Financial Health6/6
Dividends1/6

IOSP Stock Overview

Innospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally.

Rewards

Earnings are forecast to grow 21.44% per year

Earnings grew by 43.2% over the past year

Risk Analysis

No risks detected for IOSP from our risk checks.

Innospec Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Innospec
Historical stock prices
Current Share PriceUS$99.45
52 Week HighUS$106.87
52 Week LowUS$81.00
Beta1.13
1 Month Change9.83%
3 Month Change-2.01%
1 Year Change5.71%
3 Year Change17.00%
5 Year Change79.84%
Change since IPO493.73%

Recent News & Updates

Jul 21

Innospec: A Buy Before The Upcoming Earnings Release

There is a positive correlation between the crude oil futures price and the revenue generated by two of the three business segments at Innospec. The analysis indicates that Q2 2022 and Q3 2022 earnings will beat analysts’ EPS estimates. Innospec has a track record of beating analysts’ targets, and the market will typically buy the stock in the run-up to the earnings call. I rate IOSP a buy, with a near-term price target of $102.00 (5.5%), climbing to $107.50 by mid-November (11%). Innospec (IOSP) is a leading international specialty chemical company divided into three business units: Fuel Specialties, Performance Chemicals, and Oilfield Services. There is a positive correlation between the crude oil futures price and the revenue generated by two of the three business segments at Innospec (Fuel Specialties and Oilfield Services). However, the rise in price for crude oil futures throughout the first half of 2022 has not necessarily been considered by market analysts when formulating their EPS estimates. Not only am I expecting earnings to beat analysts' estimates, but I'm also anticipating the share price to rise in the run-up to the earnings call. I rate IOSP a buy, with a near-term price target of $102.00 (5.5%), climbing to $107.50 by mid-November (11%). Analysis Revenue for Fuel Specialties and Oilfield Services has historically been strongly correlated to the price of crude oil futures. In fact, with specific reference to the Oilfield Services business unit, Innospec stated the following in their 10-K: Trends in oil and gas prices affect the level of exploration, development and production activity of our customers, and the demand for our services and products. And in their Q4 2021 earnings press release, Innospec highlighted a delay in demand recovery for jet fuel - which is primarily derived from crude oil - as the main cause for gross margins in the Fuel Specialties business running below their target levels. Therefore, by using linear regression to model the relationship between revenue earned and historical crude oil futures prices, we can forecast revenue for the next two quarters. Revenue Estimates The analysis below considers the revenue earned by the two business units for the past 12 quarters, and the historical crude oil futures price for the final day of the prior quarter. For the purposes of the analysis, a one quarter lag to the crude oil futures price has been applied, allowing for any customer decisions based on the Futures price to materialize as revenue for Innospec. That is, the crude oil futures price at the close on March 31, 2019, is being compared against the Q2 2019 revenue. Fuel Specialties: Relationship between Crude Oil Futures prices and Fuel Specialties revenue (Image created by author using data from Investing.com and Innospec's SEC filings) Oilfield Services: Relationship between Crude Oil Futures prices and Oilfield Services revenue (Image created by author using data from Investing.com and Innospec's SEC filings) As can be seen in the graphs above, the revenue earned in both business units follows the crude oil futures price trend. The analysis suggests increased revenue in Q2 and Q3 for both Fuel Specialties and Oilfield Services versus Q1 2022 and the equivalent quarter in 2021: Revenue for Fuel Specialties and Oilfield Services business units (Image created by author using data from Innospec's SEC filings and author's calculations) Implications on Earnings By using the revenue estimates calculated from the regression analysis for Fuel Specialties and Oilfield Services and by applying the assumptions outlined in the bullet points below, I have forecast net income for Q2 and Q3 2022. Revenue estimates for the Performance Chemicals business unit have been calculated using the same YoY revenue growth rate as Q1 2022 (32.7%). Operating income has been calculated by multiplying the Q1 2022 operating margins for each business unit with the revenue estimates. Corporate costs and interest expenses have been run rated from Q1 2022. A prudent assumption on Other Income has been applied and a 24.3% effective tax rate (the Q1 2022 rate) has been used to calculate income tax. Forecast of Innospec's Earnings (Image created by author using data from Innospec's SEC filings and author's calculations) Opportunity When adjusting the net income for non-GAAP amounts and assuming the diluted average shares are reduced by 30k per quarter from the Q1 2022 average (on Feb. 15, 2022, the company announced a repurchase plan for up to $50m of common stock over a three-year period; March 2022 saw 10k shares repurchased), the EPS is: Anticipated Earnings per Share (Image created by author using data from Innospec's Yahoo Finance and author's calculations) Per the table, both Q2 2022 and Q3 2022 earnings will beat analysts' estimates. Innospec has a track record of beating analysts' estimates, as you can see from the table below: Earnings History (Yahoo Finance) In fact, such is the track record of Innospec to outperform estimates, the market will typically buy the stock in the run-up to the earnings call with little movement to the price in the days that follow. Below, I have included charts showing the share price movement in the five days before and after the earnings release for each of the last four quarters. Q2 2021: Share price movement in the days around the Q2'21 earnings release (Image created by author using data from Yahoo Finance) Gains from July 27, 2021, to Aug. 3, 2021 (earnings release) = 1.2% Gains from July 27, 2021, to Aug. 10, 2021 = 7.8% Q3 2021: Share price movement in the days around the Q3'21 earnings release (Image created by author using data from Yahoo Finance) Gains from Oct. 27, 2021, to Nov. 3, 2021 (earnings release) = 7.0% Gains from Oct. 27, 2021, to Nov. 10, 2021 = 7.1% Q4 2021: Share price movement in the days around the Q4'21 earnings release (Image created by author using data from Yahoo Finance) Gains from Feb. 9, 2022, to Feb. 16, 2022 (earnings release) = 7.2% Gains from Feb. 9, 2022, to Feb. 24, 2022 = 4.3%

Jul 20
Should You Think About Buying Innospec Inc. (NASDAQ:IOSP) Now?

Should You Think About Buying Innospec Inc. (NASDAQ:IOSP) Now?

Innospec Inc. ( NASDAQ:IOSP ), is not the largest company out there, but it saw a double-digit share price rise of over...

Jul 02
Innospec (NASDAQ:IOSP) Has Some Way To Go To Become A Multi-Bagger

Innospec (NASDAQ:IOSP) Has Some Way To Go To Become A Multi-Bagger

What trends should we look for it we want to identify stocks that can multiply in value over the long term? Typically...

Shareholder Returns

IOSPUS ChemicalsUS Market
7D4.4%3.8%1.3%
1Y5.7%-5.8%-11.7%

Return vs Industry: IOSP exceeded the US Chemicals industry which returned -6.4% over the past year.

Return vs Market: IOSP exceeded the US Market which returned -11.6% over the past year.

Price Volatility

Is IOSP's price volatile compared to industry and market?
IOSP volatility
IOSP Average Weekly Movement3.8%
Chemicals Industry Average Movement6.9%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: IOSP is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: IOSP's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19381,900Patrick Williamshttps://innospec.com

Innospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally. The company’s Fuel Specialties segment offers a range of specialty chemical products that are used as additives in various fuels. This segment’s products are used in the operation of automotive, marine, and aviation engines; power station generators; and heating oil.

Innospec Fundamentals Summary

How do Innospec's earnings and revenue compare to its market cap?
IOSP fundamental statistics
Market CapUS$2.44b
Earnings (TTM)US$116.10m
Revenue (TTM)US$1.73b

21.2x

P/E Ratio

1.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
IOSP income statement (TTM)
RevenueUS$1.73b
Cost of RevenueUS$1.22b
Gross ProfitUS$504.90m
Other ExpensesUS$388.80m
EarningsUS$116.10m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)4.68
Gross Margin29.20%
Net Profit Margin6.71%
Debt/Equity Ratio0%

How did IOSP perform over the long term?

See historical performance and comparison

Dividends

1.3%

Current Dividend Yield

26%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is IOSP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for IOSP?

Other financial metrics that can be useful for relative valuation.

IOSP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.4x
Enterprise Value/EBITDA11.9x
PEG Ratio1x

Price to Earnings Ratio vs Peers

How does IOSP's PE Ratio compare to its peers?

IOSP PE Ratio vs Peers
The above table shows the PE ratio for IOSP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average56.5x
GCP GCP Applied Technologies
177.7xn/aUS$2.3b
MTX Minerals Technologies
12.1x11.5%US$2.1b
NGVT Ingevity
19.1x16.8%US$2.8b
SCL Stepan
16.3x6.5%US$2.5b
IOSP Innospec
21x21.4%US$2.4b

Price-To-Earnings vs Peers: IOSP is good value based on its Price-To-Earnings Ratio (21x) compared to the peer average (56.3x).


Price to Earnings Ratio vs Industry

How does IOSP's PE Ratio compare vs other companies in the US Chemicals Industry?

Price-To-Earnings vs Industry: IOSP is expensive based on its Price-To-Earnings Ratio (21x) compared to the US Chemicals industry average (16.3x)


Price to Earnings Ratio vs Fair Ratio

What is IOSP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

IOSP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio21.2x
Fair PE Ratio21.3x

Price-To-Earnings vs Fair Ratio: IOSP is good value based on its Price-To-Earnings Ratio (21x) compared to the estimated Fair Price-To-Earnings Ratio (21.3x).


Share Price vs Fair Value

What is the Fair Price of IOSP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: IOSP ($98.37) is trading above our estimate of fair value ($67.14)

Significantly Below Fair Value: IOSP is trading above our estimate of fair value.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Innospec forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


21.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: IOSP's forecast earnings growth (21.4% per year) is above the savings rate (1.9%).

Earnings vs Market: IOSP's earnings (21.4% per year) are forecast to grow faster than the US market (14.5% per year).

High Growth Earnings: IOSP's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: IOSP's revenue (7.4% per year) is forecast to grow slower than the US market (8% per year).

High Growth Revenue: IOSP's revenue (7.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if IOSP's Return on Equity is forecast to be high in 3 years time


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Past Performance

How has Innospec performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


2.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: IOSP has high quality earnings.

Growing Profit Margin: IOSP's current net profit margins (6.7%) are higher than last year (6.4%).


Past Earnings Growth Analysis

Earnings Trend: IOSP's earnings have grown by 2.9% per year over the past 5 years.

Accelerating Growth: IOSP's earnings growth over the past year (43.2%) exceeds its 5-year average (2.9% per year).

Earnings vs Industry: IOSP earnings growth over the past year (43.2%) exceeded the Chemicals industry 19.9%.


Return on Equity

High ROE: IOSP's Return on Equity (10.9%) is considered low.


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Financial Health

How is Innospec's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: IOSP's short term assets ($799.3M) exceed its short term liabilities ($369.2M).

Long Term Liabilities: IOSP's short term assets ($799.3M) exceed its long term liabilities ($200.1M).


Debt to Equity History and Analysis

Debt Level: IOSP is debt free.

Reducing Debt: IOSP has no debt compared to 5 years ago when its debt to equity ratio was 35.3%.

Debt Coverage: IOSP has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: IOSP has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet


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Dividend

What is Innospec current dividend yield, its reliability and sustainability?

Dividend Score

1/6

Dividend Score 1/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


1.27%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: IOSP's dividend (1.28%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.5%).

High Dividend: IOSP's dividend (1.28%) is low compared to the top 25% of dividend payers in the US market (4.05%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, IOSP has been paying a dividend for less than 10 years.

Growing Dividend: IOSP's dividend payments have increased, but the company has only paid a dividend for 9 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (26%), IOSP's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: IOSP is paying a dividend but the company has no free cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

6.2yrs

Average management tenure


CEO

Patrick Williams (57 yo)

13.33yrs

Tenure

US$9,897,900

Compensation

Mr. Patrick S. Williams serves as an Independent Director at AdvanSix Inc. since February 25, 2020. He has been the Chief Executive Officer and President at Innospec Inc. since April 2, 2009. He has been a...


CEO Compensation Analysis

Compensation vs Market: Patrick's total compensation ($USD9.90M) is above average for companies of similar size in the US market ($USD6.58M).

Compensation vs Earnings: Patrick's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: IOSP's management team is seasoned and experienced (6.2 years average tenure).


Board Members

Experienced Board: IOSP's board of directors are considered experienced (8.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Innospec Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Innospec Inc.
  • Ticker: IOSP
  • Exchange: NasdaqGS
  • Founded: 1938
  • Industry: Specialty Chemicals
  • Sector: Materials
  • Implied Market Cap: US$2.439b
  • Shares outstanding: 24.79m
  • Website: https://innospec.com

Number of Employees


Location

  • Innospec Inc.
  • 8310 South Valley Highway
  • Suite 350
  • Englewood
  • Colorado
  • 80112
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.