Innospec (IOSP) AI Stock Analysis

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Innospec

(NASDAQ:IOSP)

67Neutral

Innospec's stock score reflects a combination of strong financial stability and cash flow management against the backdrop of declining revenues and profit margins. While the technical indicators suggest weak momentum, the corporate events and earnings call highlight strategic initiatives and growth potential in specific segments, providing a balanced outlook.

Innospec (IOSP) vs. S&P 500 (SPY)

Market Cap

$2.16B

Dividend Yield1.8%

Average Volume (3M)295.11K

Price to Earnings (P/E)60.6

Beta (1Y)1.08

Revenue Growth-5.31%

EPS Growth-74.42%

CountryUS

Employees2,450

SectorBasic Materials

Sector Strength57

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)1.40

Shares Outstanding25,119,541

10 Day Avg. Volume217,005

30 Day Avg. Volume295,114

Financial Highlights & Ratios

PEG Ratio1.45

Price to Book (P/B)N/A

Price to Sales (P/S)1.30

Price to Cash Flow (P/CF)23.30

P/FCF Ratio23.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$115.00

Price Target Upside33.85% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Innospec Business Overview & Revenue Model

Company DescriptionInnospec Inc. (IOSP) is a global specialty chemicals company that develops, manufactures, and markets a range of innovative chemical products. The company's operations are segmented into three primary areas: Fuel Specialties, Performance Chemicals, and Oilfield Services. Innospec serves diverse industries, including automotive, oil and gas, personal care, and household care, providing products that improve fuel efficiency, enhance performance, and deliver environmental benefits.

How the Company Makes MoneyInnospec generates revenue through the sale of specialty chemicals across its three main business segments. In the Fuel Specialties segment, the company earns income by supplying fuel additives that enhance the performance and efficiency of fuels, catering primarily to refineries and fuel producers. The Performance Chemicals segment focuses on personal care, home care, and industrial applications, providing surfactants and other ingredients that improve product efficacy and consumer appeal. The Oilfield Services segment supports the oil and gas industry with chemicals and services that facilitate production and extraction processes. Innospec's revenue model is bolstered by strategic partnerships with industry leaders and a commitment to research and development, which drives innovation and the creation of high-value products tailored to customer needs.

Innospec Financial Statement Overview

Summary

Innospec exhibits a strong balance sheet with low debt and robust cash flow generation, despite facing revenue declines and pressure on profit margins. The company's operational efficiency and financial stability are notable strengths.

Income Statement

Positive

Innospec's revenue has declined in the latest year, indicating a challenging market environment. The gross profit margin stands at 29.42%, and the net profit margin is 1.93%, both showing a downward trend, reflecting increased cost pressures. However, the EBIT margin of 9.64% and EBITDA margin of 9.64% remain relatively stable, suggesting operational efficiency.

Balance Sheet

Very Positive

The company's balance sheet is robust, with a low debt-to-equity ratio of 0.04, indicating minimal leverage risk. The return on equity (ROE) is 2.94%, showcasing modest profitability. A high equity ratio of 69.82% demonstrates strong asset coverage by equity, providing financial stability.

Cash Flow

Positive

Free cash flow has grown by 10.00% year-over-year, reflecting improved cash generation. The operating cash flow to net income ratio of 5.18 highlights strong cash conversion efficiency, while the free cash flow to net income ratio of 4.02 suggests effective cash management strategies.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.85B	1.95B	1.96B	1.48B	1.19B
	Gross Profit
542.90M	591.10M	586.70M	434.90M	342.70M
	EBIT
177.90M	161.60M	187.30M	132.10M	82.60M
	EBITDA
224.60M	200.90M	187.30M	182.10M	92.20M
	Net Income Common Stockholders
35.60M	139.10M	133.00M	93.10M	28.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
289.20M	203.70M	147.10M	141.80M	105.30M
	Total Assets
1.73B	1.71B	1.60B	1.57B	1.40B
	Total Debt
44.90M	45.20M	45.30M	35.60M	40.80M
	Net Debt
-244.30M	-158.50M	-101.80M	-106.20M	-64.50M
	Total Liabilities
518.60M	557.80M	563.30M	537.90M	452.50M
	Stockholders Equity
1.21B	1.15B	1.04B	1.03B	944.90M
Cash Flow		Free Cash Flow
143.10M	130.10M	39.40M	54.10M	116.20M
	Operating Cash Flow
184.50M	207.30M	81.70M	93.20M	145.90M
	Investing Cash Flow
-62.00M	-111.80M	-42.10M	-36.20M	-29.70M
	Financing Cash Flow
-35.30M	-39.00M	-33.70M	-20.00M	-86.80M

Innospec Technical Analysis

Technical Analysis Sentiment

Negative

Last Price85.92

Price Trends

50DMA

97.75

Negative

100DMA

105.65

Negative

200DMA

110.18

Negative

Market Momentum

MACD

-3.59

Negative

RSI

37.75

Neutral

STOCH

56.48

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IOSP, the sentiment is Negative. The current price of 85.92 is below the 20-day moving average (MA) of 90.55, below the 50-day MA of 97.75, and below the 200-day MA of 110.18, indicating a bearish trend. The MACD of -3.59 indicates Negative momentum. The RSI at 37.75 is Neutral, neither overbought nor oversold. The STOCH value of 56.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IOSP.

Innospec Risk Analysis

Innospec disclosed 28 risk factors in its most recent earnings report. Innospec reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Innospec Peers Comparison

Overall Rating

UnderperformOutperform

Sector (48)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HWKN	74 Outperform	$2.55B	31.05	19.24%	0.57%	3.01%	12.36%
IOSP	67 Neutral	$2.16B	60.63	3.02%	1.80%	-5.31%	-74.42%
KWR	65 Neutral	$1.80B	15.62	8.49%	1.85%	-5.82%	3.75%
OLN	59 Neutral	$2.40B	22.99	5.10%	3.83%	-4.29%	-74.85%
ASH	56 Neutral	$2.38B	21.03	0.18%	3.21%	-4.35%	-115.63%
Sector *	48 Neutral	$1.91B	-1.66	-22.29%	3.86%	0.68%	-27.44%
SSL	46 Neutral	$2.24B	―	-28.05%	2.00%	-4.31%	-1421.83%

* Basic Materials Sector Average

Performance Comparison

IOSP

Innospec

86.70

-33.45

-27.84%

ASH

Ashland

50.26

-43.48

-46.38%

HWKN

Hawkins

119.93

44.45

58.89%

OLN

Olin

20.89

-31.83

-60.38%

KWR

Quaker Chemical

100.63

-85.80

-46.02%

SSL

Sasol

3.49

-4.44

-55.99%

Innospec Earnings Call Summary

Earnings Call Date: Feb 18, 2025 | % Change Since: -21.81% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

Innospec's earnings call highlighted strong performance in the Performance Chemicals and Fuel Specialties segments, along with a solid cash position and increased dividends. However, significant challenges were noted in the Oilfield Services segment, a decrease in overall revenues, and a net loss due to a pension settlement charge. The sentiment is mixed with notable strengths and significant challenges.

Highlights

Performance Chemicals Growth

Performance Chemicals delivered double-digit operating income growth over the fourth quarter last year, with revenues up 23% from $137.2 million to $169.2 million. Operating income increased by 14% to $20.6 million, and for the full year, it increased by 52% to $82.9 million.

Fuel Specialties Improvement

Fuel Specialties saw a 7% increase in operating income over the same quarter last year, with revenues up 5% to $191.8 million. Gross margins improved by 1.5 percentage points to 34.4%.

Cash Position and No Debt

Innospec ended the year with $289.2 million in cash and cash equivalents and no debt, providing significant financial flexibility.

Dividend Increase

The total dividend for the full year increased by 10% over 2023 to $1.55 per share.

Lowlights

Oilfield Services Decline

Oilfield Services revenues for the quarter were $105.8 million, down 40% from $175.4 million in the fourth quarter last year. Gross margins decreased by 7.9 percentage points to 30.1%, and operating income fell 59% to $7.5 million.

Overall Revenue Decrease

The company's total revenues for the fourth quarter were $466.8 million, a 6% decrease from $494.7 million a year ago. Full year revenues decreased 5% from $1.95 billion in 2023 to $1.85 billion in 2024.

Net Loss Due to Pension Settlement

The company incurred a non-cash settlement charge of $155.6 million related to the buyout of the UK pension scheme, resulting in a net loss for the quarter of $70.4 million.

Adjusted EPS Decline

Adjusted EPS for the quarter was $1.41, down from $1.84 a year ago. For the full year, adjusted EPS was $5.92 compared to $6.09 a year ago.

Company Guidance

In the fourth quarter of 2024, Innospec reported total revenues of $466.8 million, marking a 6% decline from the $494.7 million reported in the same quarter of the previous year. The company experienced a decrease in gross margin by 2.3 percentage points, bringing it to 29.2%. Adjusted EBITDA for the quarter was $56.6 million, down from $61.6 million the previous year. A non-cash settlement charge of $155.6 million related to a UK pension scheme buyout resulted in a net loss of $70.4 million for the quarter; however, after adjustments, net income was $46.3 million, an increase from $37.8 million in the prior year. The adjusted earnings per share (EPS) for the quarter was $1.41, compared to $1.84 in the previous year. For the full year, revenues fell 5% to $1.85 billion, with an adjusted EBITDA increase to $225.2 million from $216 million in 2023. The adjusted EPS for the year was $5.92, slightly down from $6.09 the previous year. Performance Chemicals saw a 23% year-over-year revenue increase to $169.2 million, while Fuel Specialties increased by 5% to $191.8 million. In contrast, Oilfield Services revenue dropped by 40% to $105.8 million. Cash from operations after capital expenditures for the year was $122.7 million, with the company ending the year with $289.2 million in cash and no debt. For 2025, Innospec expects continued growth in Performance Chemicals and Fuel Specialties, with a gradual recovery in Oilfield Services, and anticipates a full-year effective tax rate of around 27%.

Innospec Corporate Events

Stock BuybackBusiness Operations and Strategy

Innospec Announces New $50 Million Share Buyback

Positive

Mar 11, 2025

On March 10, 2025, Innospec Inc. announced that its Board of Directors authorized a new $50 million share repurchase program, following the expiration of a similar program earlier in the year. This strategic move, supported by the company’s strong financial position with over $289 million in net cash, aims to provide flexibility for mergers and acquisitions, organic investments, dividend growth, and further share repurchases, potentially impacting the company’s market positioning and shareholder value.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.