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Innospec Upgraded to Strong Buy on Robust Q1 and Prospects


Chemical maker Innospec Inc. IOSP was upgraded to a Zacks Rank #1 (Strong Buy) on Jun 15. Going by the Zacks model, companies carrying a Zacks Rank #1 have higher chances of outperforming the broader market.

Why the Upgrade?

Innospec has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 8.07%.

In the first-quarter 2017, Innospec posted better-than-expected results. The company posted adjusted earnings of $1.00 per share, exceeding the Zacks Consensus Estimate of 95 cents.

Revenues for the quarter rose about 39% year over year to $294.3 million, on the back of higher sales volume across core business segments. Sales from the Oilfield Services division surged roughly 84% year over year to $66.5 million, while Performance Chemicals unit expanded nearly three-fold to $94.5 million. The Octane Additives segment also demonstrated a stellar performance by recording roughly 61% year-over-year growth to $6.9 million.

Innospec Inc. Price and Consensus

Innospec Inc. Price and Consensus | Innospec Inc. Quote

The company is well positioned to record strong growth in all its business segments moving ahead. Innospec continues to integrate its recent acquisitions and is also pursuing other strategic buyouts to boost its portfolio.

Innospec also hiked its semi-annual dividend by 15% to 38 cents per common share for first-half 2017.

Innospec’s shares have moved up 8.4% in the last three months, outperforming the Zacks categorized Chemicals-Diversified industry’s gain of 3.7%.

Other Stocks to Consider

Other top-ranked companies in the basic materials space include The Sherwin-Williams Company SHW, The Chemours Company CC and Huntsman Corporation HUN. All the three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

Sherwin-Williams has expected long-term earnings growth rate of 11.4%.

Chemours has expected long-term earnings growth rate of 15.5%.

Huntsman has expected long-term earnings growth rate of 7%.

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