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.
Price History & Performance
|Historical stock prices|
|Current Share Price||US$99.45|
|52 Week High||US$106.87|
|52 Week Low||US$81.00|
|1 Month Change||9.83%|
|3 Month Change||-2.01%|
|1 Year Change||5.71%|
|3 Year Change||17.00%|
|5 Year Change||79.84%|
|Change since IPO||493.73%|
Recent News & Updates
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%
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...
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...
|IOSP||US Chemicals||US Market|
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.
|IOSP Average Weekly Movement||3.8%|
|Chemicals Industry Average Movement||6.9%|
|Market Average Movement||7.8%|
|10% most volatile stocks in US Market||16.9%|
|10% least volatile stocks in US Market||3.2%|
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
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
|IOSP fundamental statistics|
Is IOSP overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|IOSP income statement (TTM)|
|Cost of Revenue||US$1.22b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||4.68|
|Net Profit Margin||6.71%|
How did IOSP perform over the long term?See historical performance and comparison
1.3%Current Dividend Yield
Is IOSP undervalued compared to its fair value, analyst forecasts and its price relative to the market?
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
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.
|What is IOSP's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does IOSP's PE Ratio compare to its peers?
|IOSP PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
GCP GCP Applied Technologies
MTX Minerals Technologies
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.
|Current PE Ratio||21.2x|
|Fair PE Ratio||21.3x|
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.
Discover undervalued companies
How is Innospec forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?
Future Growth Score3/6
Future Growth Score 3/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
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
Discover growth companies
How has Innospec performed over the past 5 years?
Past Performance Score5/6
Past Performance Score 5/6
Growing Profit Margin
Earnings vs Industry
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.
Discover strong past performing companies
How is Innospec's financial position?
Financial Health Score6/6
Financial Health Score 6/6
Short Term Liabilities
Long Term Liabilities
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 ($200.1M).
Debt to Equity History and Analysis
Debt Level: IOSP is debt free.
Reducing Debt: IOSP has no debt compared to 5 years ago when its debt to equity ratio was 35.3%.
Debt Coverage: IOSP has no debt, therefore it does not need to be covered by operating cash flow.
Interest Coverage: IOSP has no debt, therefore coverage of interest payments is not a concern.
Discover healthy companies
What is Innospec current dividend yield, its reliability and sustainability?
Dividend Score 1/6
Cash Flow Coverage
Current Dividend Yield
Dividend Yield vs Market
Notable Dividend: IOSP's dividend (1.28%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.5%).
High Dividend: IOSP's dividend (1.28%) is low compared to the top 25% of dividend payers in the US market (4.05%).
Stability and Growth of Payments
Stable Dividend: Whilst dividend payments have been stable, IOSP has been paying a dividend for less than 10 years.
Growing Dividend: IOSP's dividend payments have increased, but the company has only paid a dividend for 9 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonably low payout ratio (26%), IOSP's dividend payments are well covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: IOSP is paying a dividend but the company has no free cash flows.
Discover strong dividend paying companies
How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Patrick Williams (57 yo)
Mr. Patrick S. Williams serves as an Independent Director at AdvanSix Inc. since February 25, 2020. He has been the Chief Executive Officer and President at Innospec Inc. since April 2, 2009. He has been a...
CEO Compensation Analysis
Compensation vs Market: Patrick's total compensation ($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.
Experienced Management: IOSP's management team is seasoned and experienced (6.2 years average tenure).
Experienced Board: IOSP's board of directors are considered experienced (8.1 years average tenure).
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
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Innospec Inc.'s employee growth, exchange listings and data sources
- 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
- Innospec Inc.
- 8310 South Valley Highway
- Suite 350
- United States
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/08/12 00:00|
|End of Day Share Price||2022/08/12 00:00|
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.