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Innospec Inc (IOSP)
NASDAQ:IOSP
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Innospec
(NASDAQ:IOSP)
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Rating:73Outperform
Price Target:
$96.00
▲(28.77% Upside)
Action:UpgradedDate:02/19/26
The score is anchored by strong underlying financial strength (low leverage, net cash and positive free cash flow) and supportive technical momentum (price above key moving averages, positive MACD). It is tempered by recent top-line softness and mixed profitability/cash generation, plus a near-term Q1 2026 earnings headwind despite management’s expectation for improvement later in 2026.
Positive Factors
Balance sheet strength
Innospec's conservative balance sheet with very low leverage and growing equity provides durable financial flexibility. Net cash and minimal debt support dividends, buybacks, M&A and capex through cyclical downturns, lowering refinancing risk and enabling strategic investment over the next 2–6 months.
Fuel Specialties cash generation
Fuel Specialties is a consistently cash-generative, higher-margin business with volume growth and rising operating income. Its resilience helps stabilize consolidated cash flows and funds corporate priorities, making inroads against cyclical weakness in other segments and supporting sustainable shareholder returns.
Operational margin recovery
Performance Chemicals shows structural improvement from price/mix, manufacturing efficiencies and lower overheads. Sustained margin actions and cost discipline can permanently raise profitability if maintained, improving operating leverage and reducing sensitivity to volume swings across the midterm.
Negative Factors
Top-line declines
Persistent revenue declines across multiple years signal structural demand or market-share pressure. Continued top-line erosion undermines operating leverage and margin recovery, requiring sustained new product wins, geographic recovery or stronger pricing to restore multi-quarter revenue growth and EPS durability.
Weaker operating cash conversion
A notable drop in operating cash after capex and sub-1x free cash flow conversion versus earnings reduces internal funding capacity. Even with net cash, weaker cash conversion constrains reinvestment, M&A and dividend upside if margins or volumes fail to stabilize, elevating execution risk over coming quarters.
Oilfield Services regional uncertainty
Continued absence of prior Mexico/Latin America volumes creates a durable headwind for Oilfield Services, which saw large revenue decline. Regional exposure and slow demand recovery limit near-term top-line upside and make segment performance dependent on new geographic wins or product expansion.
Innospec (IOSP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.96B
Dividend Yield2.19%
Average Volume (3M)292.20K
Price to Earnings (P/E)17.0
Beta (1Y)0.98
Revenue Growth-4.49%
EPS Growth-100.80%
CountryUS
Employees2,450
SectorBasic Materials
Sector Strength58
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)1.50
Shares Outstanding24,777,859
10 Day Avg. Volume378,556
30 Day Avg. Volume292,198
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)1.44
Price to Sales (P/S)1.07
P/FCF Ratio21.64
Enterprise Value/Market Cap0.86
Enterprise Value/Revenue0.95
Enterprise Value/Gross Profit3.44
Enterprise Value/Ebitda9.42
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)5.24
Revenue Forecast (FY)$1.85B
Innospec Business Overview & Revenue Model
Company DescriptionInnospec Inc. (IOSP) is a global specialty chemicals company that operates primarily in the personal care, fuels, and industrial sectors. The company develops and manufactures a range of innovative chemical products, including surfactants, performance chemicals, and additives, which are used in various applications such as personal care formulations, fuel additives, and other industrial processes. With a strong focus on sustainability and innovation, Innospec aims to provide high-quality solutions that meet customer needs across diverse markets.
How the Company Makes MoneyInnospec generates revenue primarily through the sale of its specialty chemical products across different segments. The company has key revenue streams from its Personal Care segment, which includes products for skin and hair care; the Fuels segment, which provides fuel additives that enhance performance and reduce emissions; and the Industrial segment, which includes a variety of performance chemicals for different industrial applications. Innospec's revenue model is bolstered by long-term relationships with customers and partnerships with leading brands in the personal care and automotive industries. Additionally, the company invests in research and development to create innovative solutions that meet evolving market demands, further driving its sales and profitability.
Innospec Key Performance Indicators (KPIs)
Any
Operating Income by Segment
Breaks down operating profit across Innospec’s business lines (e.g., fuel additives, oilfield chemicals, performance specialties), revealing which segments generate core earnings and which consume resources. Tracks how margin trends, cyclical exposure to oil markets, or restructuring affect overall profitability and where management is allocating capital.
Breaks down operating profit across Innospec’s business lines (e.g., fuel additives, oilfield chemicals, performance specialties), revealing which segments generate core earnings and which consume resources. Tracks how margin trends, cyclical exposure to oil markets, or restructuring affect overall profitability and where management is allocating capital.
Data provided by:
The Fly
The FlyInnospec Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
Balanced/Neutral. The company showed notable positives including a strong Q4 net income turnaround, record-like Fuel Specialties results, sequential recovery in Performance Chemicals, improved corporate cost control, a clean balance sheet with no debt and increased dividends. However, these are offset by declines in total revenue and adjusted EBITDA for the year, meaningful margin and volume pressure in Performance Chemicals, significant full-year revenue declines in Oilfield Services, a sharp drop in operating cash flow after capex, and a near-term headwind from a historic winter storm expected to depress Q1 2026 results. Management expects operational improvements later in 2026 (particularly Q3–Q4), but near-term challenges and mixed full-year metrics lead to a neutral overall assessment.Q4-2025 Updates
Positive Updates
Q4 Net Income Turnaround
Q4 net income of $47.4 million versus a net loss of $70.4 million a year ago, driven in part by the absence of the prior year's U.K. pension scheme buyout charge and favorable special-item effects (GAAP EPS $1.91, including a $0.41 per-share positive net special-item effect).
Improving Adjusted EPS in Quarter
Adjusted EPS for Q4 was $1.50, up from $1.41 a year ago (approximately +6.4%), reflecting operational progress after adjusting for special items.
Fuel Specialties Strong Performance
Fuel Specialties Q4 revenues of $194.1 million (+1% YoY), volumes up 8%, operating income of $37.2 million (+7% YoY). Full-year operating income increased 12% to $144.8 million, highlighting a consistently strong, cash-generative business with a richer product mix.
Performance Chemicals Sequential Recovery
Performance Chemicals Q4 revenues $168.4 million (flat YoY) with sequential improvement: Q4 gross margin improved 3 percentage points versus Q3 and operating income nearly doubled from $9.2 million in Q3 to $17.7 million in Q4, driven by margin actions, lower overheads, manufacturing efficiencies and price-cost management.
Oilfield Services Operating Income Improvement (Q4)
Oilfield Services Q4 operating income was $8.2 million, up 9% YoY despite a 12% YoY revenue decline, with gross margin expansion to 31.9% (+1.8 percentage points), and operational momentum from a richer sales mix and lower overheads.
Strong Balance Sheet and Capital Actions
Cash and cash equivalents of $292.5 million with no debt; semiannual dividend increased 10% to total $1.71 per share for the year; full-year share repurchases totaled 247,000 shares for $22.2 million; continued balance sheet flexibility for dividends, buybacks, organic investment and M&A.
Corporate Cost and Tax Improvements
Corporate costs in Q4 were $16.0 million, down $4.6 million YoY driven by lower personnel-related costs; full-year adjusted effective tax rate improved to 24.1% from 26.4% in the prior period and is expected around 26% in 2026.
Capital Discipline and Cash Flow
Q4 operating cash flow before capex was $61.4 million with capex of $20.5 million; full-year cash from operations after capex was $63.9 million and the company finished the period net cash positive.
Negative Updates
Revenue Declines (Q4 and Full Year)
Total company revenues for Q4 were $455.6 million, down 2% YoY (from $466.8 million); full-year revenues were $1.8 billion, down 4% versus 2024, reflecting top-line pressure across segments.
Full-Year Adjusted EBITDA and EPS Pressure
Adjusted EBITDA for the full year decreased to $203.0 million from $225.2 million in 2024 (roughly -9.9%). Excluding special items, adjusted EPS for the full year fell to $5.27 from $5.92 a year ago (≈ -10.9%).
Performance Chemicals Margin and Volume Weakness
Performance Chemicals Q4 gross margin declined to 18.1%, down 4.6 percentage points YoY from 22.7%; Q4 operating income fell 14% YoY to $17.7 million and volumes were down 7% YoY (partially offset by price/mix +3% and currency +4%). Full-year operating income decreased 26% to $61.0 million.
Oilfield Services Revenue and Full-Year Profit Decline
Oilfield Services Q4 revenues were $93.1 million, down 12% YoY, and full-year revenues fell 19% to $395.1 million. Full-year operating income decreased 40% to $23.3 million, reflecting lost volumes (including the continued absence of prior Latin American business) despite margin improvement in Q4.
Q1 2026 Weather-Related Impact
A historic winter storm in late January is expected to materially depress Q1 2026 results: Performance Chemicals Q1 operating income expected around $10–11 million (≈ $5–6 million below prior internal expectations) and Oilfield Services Q1 operating income expected around $5–6 million (≈ $2 million below expectation). Some production losses likely cannot be fully recouped.
Reduced Full-Year Operating Cash Generation
Cash from operations after capex for the full year was $63.9 million versus $122.7 million in 2024, indicating a substantial decline in operating cash generation year-over-year.
Adverse Price/Mix in Fuel Specialties
Fuel Specialties experienced an adverse price/mix of 10% in Q4 despite volumes being up 8%, indicating margin pressure from product/pricing dynamics in pockets of the business even as overall Fuel margins were maintained.
Uncertainty on Mexico and Latin America Sales
Management's outlook does not assume resumption of prior Mexico sales in 2026 and Latin American recoveries remain uncertain; prior Latin American revenue contribution has not resumed and remains a headwind to Oilfield Services top line.
Company Guidance
Management guided that, despite a late‑January winter storm that will pressure Performance Chemicals and Oilfield Services in Q1, they expect full‑year 2026 improvements in both businesses; specifically, Q1 operating income is forecast at roughly $10–11 million for Performance Chemicals (about $5–6 million below plan) and $5–6 million for Oilfield Services (about $2 million below plan). They said Fuel Specialties should continue to deliver consistent results, the DRA expansion will drive incremental Oilfield volumes, and the outlook assumes no resumption of Mexico sales in 2026. On the cost and tax side, corporate costs are expected to run about $20 million per quarter (≈$80 million full‑year) and the full‑year effective tax rate is expected to be around 26%. Management also highlighted a net cash position of ~$292.5 million with no debt and continued balance‑sheet flexibility for dividend growth, buybacks, organic investment and M&A.Innospec Financial Statement Overview
Summary
Strong financial foundation driven by an excellent balance sheet (very low leverage, growing equity) and consistently positive free cash flow. Offsetting this, revenue has declined recently and profitability/cash conversion has been uneven, including pressure in 2025 margins and a year-over-year drop in cash generation after capex.Income Statement
Revenue has softened over the last few years, with declines in 2023–2025 (including a sharp drop in 2025), which weighs on overall momentum. Profitability at the gross level has been fairly steady (roughly high‑20s to ~30% gross margin historically), but earnings have been volatile: net income fell sharply in 2024 versus 2023 and then rebounded in 2025. EBITDA margin has generally been in the low-teens range, though it stepped down in 2025, suggesting some near-term pressure on operating performance.62
Positive
Balance Sheet
The balance sheet appears conservatively positioned with very low leverage: debt-to-equity has remained around ~0.03–0.04 across periods, and equity has grown steadily over time. Total assets have also trended upward, indicating balance-sheet expansion without meaningfully increasing debt. A key weakness is that returns on equity have been uneven, falling materially in 2024 and (per provided data) not showing strength in 2025, which signals that profitability has not consistently kept pace with the growing equity base.86
Very Positive
Cash Flow
Cash generation is generally positive with operating cash flow and free cash flow consistently above zero, and free cash flow improved meaningfully in 2025 versus 2024. However, cash flow conversion has been inconsistent: operating cash flow relative to net income is modest in 2024–2025, and free cash flow relative to net income is below 1x across all years shown, implying earnings are not fully translating into free cash. Free cash flow also showed volatility earlier in the period (notably weaker 2021–2022), which adds some execution risk.68
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.78B | 1.85B | 1.95B | 1.96B | 1.48B |
| Gross Profit | 492.40M | 542.90M | 591.10M | 586.70M | 434.90M |
| EBITDA | 205.60M | 224.60M | 200.90M | 227.40M | 173.00M |
| Net Income | 116.60M | 35.60M | 139.10M | 133.00M | 93.10M |
Balance Sheet | |||||
| Total Assets | 1.83B | 1.73B | 1.71B | 1.60B | 1.57B |
| Cash, Cash Equivalents and Short-Term Investments | 292.50M | 289.20M | 203.70M | 147.10M | 141.80M |
| Total Debt | 89.50M | 44.90M | 45.20M | 45.30M | 35.60M |
| Total Liabilities | 499.50M | 518.60M | 557.80M | 563.30M | 537.90M |
| Stockholders Equity | 1.33B | 1.21B | 1.15B | 1.04B | 1.03B |
Cash Flow | |||||
| Free Cash Flow | 88.00M | 143.10M | 145.20M | 39.40M | 54.10M |
| Operating Cash Flow | 138.30M | 184.50M | 207.30M | 81.70M | 93.20M |
| Investing Cash Flow | -75.10M | -62.00M | -111.80M | -42.10M | -36.20M |
| Financing Cash Flow | -63.90M | -35.30M | -39.00M | -33.70M | -20.00M |
Innospec Technical Analysis
Negative
74.55
Price Trends
81.02
Negative
77.61
Negative
80.41
Negative
Market Momentum
-0.53
Positive
33.68
Neutral
6.95
Positive
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 74.55 is below the 20-day moving average (MA) of 83.80, below the 50-day MA of 81.02, and below the 200-day MA of 80.41, indicating a bearish trend. The MACD of -0.53 indicates Positive momentum. The RSI at 33.68 is Neutral, neither overbought nor oversold. The STOCH value of 6.95 is Positive, 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.96B | 17.00 | -0.09% | 2.19% | -4.49% | -100.80% | |
63 Neutral | $2.18B | -137.42 | -1.07% | 0.74% | -2.53% | -100.23% | |
62 Neutral | $2.74B | -1,239.74 | -0.64% | 1.37% | 0.08% | -107.33% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
61 Neutral | $1.19B | 25.63 | 3.67% | 3.33% | 5.35% | -1.43% | |
59 Neutral | $2.93B | ― | -29.98% | 2.79% | -13.67% | -608.89% | |
56 Neutral | $2.56B | -38.07 | -38.91% | ― | -13.39% | 88.25% |
* Basic Materials Sector Average
IOSP
Innospec
76.58
-24.62
-24.33%
ASH
Ashland
62.27
2.86
4.81%
MTX
Minerals Technologies
70.62
2.39
3.51%
KWR
Quaker Chemical
147.03
10.21
7.46%
SCL
Stepan Company
50.89
-9.07
-15.13%
NGVT
Ingevity
72.03
24.37
51.13%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.