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Why Is Ingevity (NGVT) Down 8.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Ingevity (NGVT - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ingevity due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ingevity's Earnings and Sales Miss Estimates in Q3
Ingevity recorded third-quarter 2023 profits of $25.2 million or 69 cents per share, down from $75.4 million or $1.98 per share in the year-ago quarter.
Excluding one-time items, adjusted earnings in the quarter were $1.21 per share, down from $2.09 a year ago. The figure missed the Zacks Consensus Estimate of $1.22.
Revenues fell 7.5% year over year to $446 million in the quarter, missing the Zacks Consensus Estimate of $466.4 million. Lower volumes due to weak industrial demand mainly affected Advanced Polymer Technologies and the Industrial Specialties business lines, partly offset by increased North America and Asia sales and higher pricing in the Pavement Technologies business line.
Segmental Review
The Performance Chemicals division generated revenues of $256 million in the reported quarter, down around 4% year over year. The reported figure was lower than the consensus estimate of $264 million.
Revenues in the Performance Materials unit rose around 2% year over year to $147.2 million. The figure was higher than the consensus estimate of $142 million.
Sales in the Advanced Polymer Technologies segment were down 38% at $42.8 million. It was below the consensus estimate of $61 million.
Financials
Operating cash flow in the third quarter was $106.9 million, and free cash flow came in at $73.4 million. This was primarily due to greater inventory levels brought on both higher CTO prices and lower demand for rosin. There were no share repurchases during the quarter, and $353.4 million of the $500 million Board authorization from July 2022 is still available. Due to higher borrowing for the Ozark acquisition in the fourth quarter of 2022, net leverage was 3.2 times.
Outlook
As it enters the fourth quarter, the year-long soft industrial demand environment does not seem to be improving. Therefore, volume weakness is anticipated to persist, Ingevity noted. Price pressure is increasing as the weakness continues, especially in cyclical areas like adhesives and oilfields. The company cut its adjusted EBITDA outlook for the full year to be between $375 million and $390 million due to growing CTO expenses in the fourth quarter and the failure to recover costs through pricing adjustments.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -109.82% due to these changes.
VGM Scores
At this time, Ingevity has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ingevity has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Ingevity belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Element Solutions (ESI - Free Report) , has gained 12.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Element Solutions reported revenues of $599.3 million in the last reported quarter, representing a year-over-year change of -3.1%. EPS of $0.36 for the same period compares with $0.36 a year ago.
Element Solutions is expected to post earnings of $0.32 per share for the current quarter, representing a year-over-year change of +10.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Element Solutions. Also, the stock has a VGM Score of B.
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Why Is Ingevity (NGVT) Down 8.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Ingevity (NGVT - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ingevity due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ingevity's Earnings and Sales Miss Estimates in Q3
Ingevity recorded third-quarter 2023 profits of $25.2 million or 69 cents per share, down from $75.4 million or $1.98 per share in the year-ago quarter.
Excluding one-time items, adjusted earnings in the quarter were $1.21 per share, down from $2.09 a year ago. The figure missed the Zacks Consensus Estimate of $1.22.
Revenues fell 7.5% year over year to $446 million in the quarter, missing the Zacks Consensus Estimate of $466.4 million. Lower volumes due to weak industrial demand mainly affected Advanced Polymer Technologies and the Industrial Specialties business lines, partly offset by increased North America and Asia sales and higher pricing in the Pavement Technologies business line.
Segmental Review
The Performance Chemicals division generated revenues of $256 million in the reported quarter, down around 4% year over year. The reported figure was lower than the consensus estimate of $264 million.
Revenues in the Performance Materials unit rose around 2% year over year to $147.2 million. The figure was higher than the consensus estimate of $142 million.
Sales in the Advanced Polymer Technologies segment were down 38% at $42.8 million. It was below the consensus estimate of $61 million.
Financials
Operating cash flow in the third quarter was $106.9 million, and free cash flow came in at $73.4 million. This was primarily due to greater inventory levels brought on both higher CTO prices and lower demand for rosin. There were no share repurchases during the quarter, and $353.4 million of the $500 million Board authorization from July 2022 is still available. Due to higher borrowing for the Ozark acquisition in the fourth quarter of 2022, net leverage was 3.2 times.
Outlook
As it enters the fourth quarter, the year-long soft industrial demand environment does not seem to be improving. Therefore, volume weakness is anticipated to persist, Ingevity noted. Price pressure is increasing as the weakness continues, especially in cyclical areas like adhesives and oilfields. The company cut its adjusted EBITDA outlook for the full year to be between $375 million and $390 million due to growing CTO expenses in the fourth quarter and the failure to recover costs through pricing adjustments.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -109.82% due to these changes.
VGM Scores
At this time, Ingevity has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Ingevity has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Ingevity belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Element Solutions (ESI - Free Report) , has gained 12.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Element Solutions reported revenues of $599.3 million in the last reported quarter, representing a year-over-year change of -3.1%. EPS of $0.36 for the same period compares with $0.36 a year ago.
Element Solutions is expected to post earnings of $0.32 per share for the current quarter, representing a year-over-year change of +10.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Element Solutions. Also, the stock has a VGM Score of B.