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Ingevity (NGVT) Up 10.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Ingevity (NGVT). Shares have added about 10.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ingevity due for a pullback? 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 Surpass Estimates in Q1

Ingevity recorded profits of $60.8 million or $1.55 per share in first-quarter 2022, up from a profit of $48.7 million or $1.20 in the year-ago quarter.

Excluding one-time items, adjusted earnings in the quarter were $1.62 per share, up from $1.27 a year ago. The figure topped the Zacks Consensus Estimate of $1.11.

The company’s revenues rose around 20% year over year to a record $382.8 million in the quarter, beating the Zacks Consensus Estimate of $344 million. In the first quarter, the company benefited from actions to increase prices on strong end-market demand, which helped it offset inflationary cost pressures.

Adjusted EBITDA went up roughly 13% year over year to $119 million in the quarter.

Segment Review

The Performance Chemicals division generated revenues of $234.4 million in the reported quarter, rising around 31% year over year, mainly on strong volume growth and price increases driven by strong demand. Sales rose around 34% in Engineered Polymers while sales in Industrial Specialties applications went up roughly 29% as price hikes offset higher costs.

Revenues in the Performance Materials unit increased around 6% year over year to $148.4 million, aided by regional mix shifts in automotive products sales as well as higher volume and price increases in process purification products.

Financials

Ingevity ended the quarter with cash and cash equivalents of $222.6 million, down around 6% year over year. Long-term debt was $945.6 million, down roughly 25% year over year.

Operating cash flow was $24.3 million for the reported quarter, down around 52% year over year.

Outlook

The company raised the top ends of its guidance ranges for 2022. It now expects sales in the band of $1.525-$1.65 billion, compared with $1.525-$1.6 billion it expected earlier. Adjusted EBITDA is now forecast between $430 million and $470 million, compared with the prior view of $430 million and $460 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Ingevity has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ingevity has a Zacks Rank #3 (Hold). We expect an in-line 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, Ecolab (ECL), has gained 3.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Ecolab reported revenues of $3.27 billion in the last reported quarter, representing a year-over-year change of +13.2%. EPS of $0.82 for the same period compares with $0.81 a year ago.

Ecolab is expected to post earnings of $1.20 per share for the current quarter, representing a year-over-year change of -1.6%. Over the last 30 days, the Zacks Consensus Estimate has changed 0%.

Ecolab has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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