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Here’s Why Ingevity (NGVT) is a Solid Investment Choice Now

Zacks

We believe that Ingevity Corporation NGVT is a solid choice for investors seeking exposure in the chemical space. Strengthening end-market demand for its products, services offered by both its business segments and organic and inorganic efforts bode well.

The stock has been upgraded to a Zacks Rank #1 (Strong Buy) on Oct 6.

Why the Upgrade?

Sentiments are positive for Ingevity, as evident from 17.7% rally in its share price since the beginning of the year. The stock has outperformed 10% gain recorded by the industry it belongs to over the same period.



Also, the stocks’ earnings estimates for 2017 have been revised upward by five analysts while that for 2018 have been raised by four in the last 60 days. Currently, the Zacks Consensus Estimate stands at $2.42 for 2017 and $2.78 for 2018, representing 1.7% and 4.5% increase over their respective 60-day ago estimates.

Ingevity Corporation Price and Consensus

Ingevity Corporation Price and Consensus | Ingevity Corporation Quote

We believe that strong demand for Ingevity’s carbon technologies in the automotive and process purification industries have boosted growth prospects of its Performance Materials segment. To tap the growing demand for pelletized carbon products, especially from the automotive industry, the company started constructing a new activated carbon extrusion plant in China. The investment on the new plant is part of the capital expenditure planned for expanding the Performance Materials segment.

Also, rising demand for pavement and oilfield technologies and that for industrial specialties have strengthened the company’s Performance Chemicals segment’s business. In August, the company announced that it will acquire Georgia-Pacific’s pine chemicals business in late 2017. This buyout will complement its Performance Chemicals segment and will be accretive to earnings in the first year of closure of the deal. Also, the company anticipates realizing net synergies of $11 million from the acquired assets in the form of lower transportation and logistics costs and increase in manufacturing efficiency in three chemical plants.

For 2017, Ingevity anticipates gaining from the growing customer preference for its products and services in both the business segments. Revenues are now anticipated to be in a $940-$955 million range, up from the earlier forecast of $930-$950 million. Adjusted earnings before interest, tax, depreciation and amortization is expected to be $220-$230 million versus $215-$225 expected earlier.

Ingevity is slated to release its third-quarter 207 results on Nov 1, after the market closes. It currently has Earnings ESP of +2.94% for the quarter with the Most Accurate estimate of 77 cents above the Zacks Consensus Estimate of 75 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Ingevity has a market capitalization of approximately $2.7 billion. Other stocks worth considering in the industry include AdvanSix Inc. ASIX, CSW Industrials, Inc. CSWI and Kraton Corporation KRA. All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AdvanSix’s earnings estimates for 2017 and 2018 improved in the last 60 days. Also, the company reported better-than-expected results in the last quarter with a positive earnings surprise of 25.76%.

CSW Industrials’ earnings estimates for fiscal 2018 and fiscal 2019 improved in the last 60 days. Also, it pulled off an average positive earnings surprise of 4.84% for the last four quarters.

Kraton Corporation’s earnings estimates for 2017 and 2018 were revised upward in the last 60 days. It delivered an average positive earnings surprise of 16.54% for the last four quarters.

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