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Innospec Inc (IOSP)
NASDAQ:IOSP
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Innospec
(NASDAQ:IOSP)
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Rating:63Neutral
Price Target:
$91.00
▲(15.51% Upside)
Innospec's overall stock score reflects a stable financial position with strong revenue growth and low leverage. However, declining profitability margins and cash flow challenges weigh on the score. The technical indicators suggest a neutral trend, and the high P/E ratio indicates overvaluation. The earnings call provided mixed signals, with some strengths in specific divisions but overall margin pressure.
Innospec (IOSP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.96B
Dividend Yield2.07%
Average Volume (3M)220.04K
Price to Earnings (P/E)104.5
Beta (1Y)1.01
Revenue Growth-5.45%
EPS Growth-87.13%
CountryUS
Employees2,450
SectorBasic Materials
Sector Strength58
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)1.26
Shares Outstanding24,833,160
10 Day Avg. Volume251,818
30 Day Avg. Volume220,043
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue1.06
Enterprise Value/Gross Profit3.73
Enterprise Value/Ebitda27.46
Forecast
1Y Price Target
$91.00Price Target Upside15.51% Upside
Rating ConsensusHold
Number of Analyst Covering0
Innospec Business Overview & Revenue Model
Company DescriptionInnospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally. The company's Fuel Specialties segment offers a range of specialty chemical products that are used as additives in various fuels. This segment's products are used in the operation of automotive, marine, and aviation engines; power station generators; and heating oil. Its Performance Chemicals segment provides technology-based solutions for its customers' processes or products that focuses on the personal care, home care, agrochemical, and metal extraction markets. The company's Oilfield Services segment develops and markets chemical solutions for fracturing, stimulation, and completion operations; and products for oil and gas production, as well as products to prevent loss of mud in drilling operations. It sells its products primarily to oil and gas exploration and production companies, oil refineries, fuel manufacturers and users, personal care and home care companies, formulators of agrochemical and metal extraction formulations, and other chemical and industrial companies. The company was formerly known as Octel Corp. and changed its name to Innospec Inc. in January 2006. Innospec Inc. was founded in 1938 and is headquartered in Englewood, Colorado.
How the Company Makes MoneyInnospec generates revenue through the sale of its specialty chemical products across several key sectors. The primary revenue streams include the personal care segment, where the company sells ingredients and formulations for cosmetics and skincare products; the fuel additives segment, which offers products that improve fuel efficiency and reduce harmful emissions in automotive and industrial applications; and the oilfield services segment, providing chemicals that enhance extraction processes and improve oil recovery. Significant partnerships with major companies in these industries bolster Innospec's market presence and contribute to its earnings. Moreover, the company's focus on innovation and sustainability helps it to command premium pricing for its advanced and eco-friendly products, further enhancing its profitability.
Innospec Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 04, 2025
Earnings Call Sentiment Negative
The earnings call highlighted strong performance in Fuel Specialties and a robust cash position, but was overshadowed by significant margin pressure and revenue declines in Performance Chemicals and Oilfield Services. Despite some positive developments, such as disciplined pricing and share buybacks, the overall financial results showed notable weaknesses.Q2-2025 Updates
Positive Updates
Fuel Specialties Operating Income Growth
Fuel Specialties had another strong quarter with operating income growing by 16% and margins expanding to 38.1%, benefiting from disciplined pricing and a stronger sales mix.
Performance Chemicals Sales Growth
Performance Chemicals delivered a strong high single-digit sales growth of 9% compared to last year, driven by a 4% increase in volumes and positive currency impacts.
Share Buyback and Dividend
In the second quarter, Innospec bought back almost 90,000 shares at a cost of $8.2 million and paid a semiannual dividend of $20.8 million, demonstrating a commitment to returning value to shareholders.
Cash and Debt Position
Innospec ended the quarter with $266.6 million in cash and cash equivalents and no debt, providing significant balance sheet flexibility for future investments and shareholder returns.
Negative Updates
Decline in Overall Gross Margin
Overall gross margin decreased by 1.2 percentage points from last year to 28%, primarily due to challenges in Performance Chemicals and Oilfield Services.
Decrease in Net Income
Net income for the quarter was $23.5 million, a decrease from $31.2 million a year ago, reflecting ongoing challenges in certain segments.
Performance Chemicals Margin Pressure
Performance Chemicals' gross margins decreased by 5.1 percentage points to 17.5%, and operating income decreased by 33%, driven by lower sales pricing and a weaker sales mix.
Oilfield Services Revenue and Margin Decline
Revenues in Oilfield Services for the quarter were down 7%, with gross margins decreasing by 1 percentage point, and operating income decreasing by 15% from a year ago.
Adjusted EPS Decrease
Adjusted EPS for the quarter was $1.26 compared to $1.39 a year ago, indicating a decrease in earnings performance.
Company Guidance
During Innospec's Second Quarter 2025 earnings call, the company provided guidance highlighting a focus on margin improvement, particularly in their Performance Chemicals and Oilfield Services divisions. Despite a 1% increase in total revenues to $439.7 million, the overall gross margin decreased by 1.2 percentage points to 28%. Adjusted EBITDA was reported at $49.1 million, down from $54.1 million the previous year, while net income dropped to $23.5 million from $31.2 million. The Performance Chemicals division experienced a 9% revenue increase to $173.8 million, but operating income fell 33% due to lower sales pricing and an unfavorable sales mix. Fuel Specialties, however, posted a solid performance with operating income rising 16% to $35.4 million, supported by disciplined pricing and strong sales mix, despite a 1% revenue decrease to $165.1 million. Oilfield Services saw a sequential improvement in operating income to $6.2 million, although it was still down 15% year-over-year. The company remains focused on achieving medium-term operating income margin targets above 10%, leveraging sales, technology, and cost management strategies. The effective tax rate for the quarter was reduced to 26.3% from 28.6% due to the geographical location of profits. With $266.6 million in cash and no debt, Innospec plans to continue shareholder returns through dividend growth and share buybacks, having repurchased 90,000 shares for $8.2 million and paid a semiannual dividend of $20.8 million during the quarter.Innospec Financial Statement Overview
Summary
Innospec demonstrates a stable financial position with strong revenue growth and low leverage. However, profitability margins have declined, and there are some challenges in cash flow management. The company shows potential for growth, but needs to address profitability and cash flow efficiency to enhance overall financial health.Income Statement
Innospec's income statement reveals a mixed performance. The TTM data shows a gross profit margin of 28.68%, which is slightly below the previous year's 29.42%. The net profit margin has decreased to 1.51% from 1.93% in the previous year, indicating reduced profitability. However, the company has shown a strong revenue growth rate of 26.3% in the TTM, recovering from a decline in the previous year. The EBIT and EBITDA margins have also decreased, reflecting potential operational challenges.65
Positive
Balance Sheet
The balance sheet of Innospec is relatively strong, with a low debt-to-equity ratio of 0.03 in the TTM, indicating low leverage and financial stability. The return on equity (ROE) is modest at 2.96%, showing a slight improvement from the previous year. The equity ratio stands at 78.14%, suggesting a solid equity base relative to total assets. Overall, the balance sheet reflects financial stability with low risk.72
Positive
Cash Flow
Innospec's cash flow statement shows a positive trend in free cash flow growth at 9.52% in the TTM, indicating improved cash generation. The operating cash flow to net income ratio is strong at 131.9, suggesting efficient cash conversion. However, the free cash flow to net income ratio has decreased to 57.32%, which may indicate some challenges in maintaining cash flow relative to earnings.68
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.79B | 1.85B | 1.95B | 1.96B | 1.48B | 1.19B |
| Gross Profit | 508.60M | 542.90M | 591.10M | 586.70M | 434.90M | 342.70M |
| EBITDA | 69.00M | 224.60M | 200.90M | 231.80M | 182.10M | 92.20M |
| Net Income | 19.30M | 35.60M | 139.10M | 133.00M | 93.10M | 28.70M |
Balance Sheet | ||||||
| Total Assets | 1.81B | 1.73B | 1.71B | 1.60B | 1.57B | 1.40B |
| Cash, Cash Equivalents and Short-Term Investments | 266.60M | 289.20M | 203.70M | 147.10M | 141.80M | 105.30M |
| Total Debt | 49.30M | 44.90M | 45.20M | 45.30M | 35.60M | 40.80M |
| Total Liabilities | 504.60M | 518.60M | 557.80M | 563.30M | 537.90M | 452.50M |
| Stockholders Equity | 1.30B | 1.21B | 1.15B | 1.04B | 1.03B | 944.90M |
Cash Flow | ||||||
| Free Cash Flow | 82.80M | 143.10M | 145.20M | 39.40M | 54.10M | 116.20M |
| Operating Cash Flow | 136.80M | 184.50M | 207.30M | 81.70M | 93.20M | 145.90M |
| Investing Cash Flow | -64.40M | -62.00M | -111.80M | -42.10M | -36.20M | -29.70M |
| Financing Cash Flow | -49.30M | -35.30M | -39.00M | -33.70M | -20.00M | -86.80M |
Innospec Technical Analysis
Neutral
78.78
Price Trends
82.17
Negative
84.12
Negative
92.37
Negative
Market Momentum
-1.67
Positive
41.17
Neutral
43.46
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IOSP, the sentiment is Neutral. The current price of 78.78 is below the 20-day moving average (MA) of 80.15, below the 50-day MA of 82.17, and below the 200-day MA of 92.37, indicating a bearish trend. The MACD of -1.67 indicates Positive momentum. The RSI at 41.17 is Neutral, neither overbought nor oversold. The STOCH value of 43.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.11B | 19.40 | 4.77% | 3.13% | 2.64% | 66.43% | |
63 Neutral | $1.96B | 104.48 | 1.55% | 2.07% | -5.45% | -87.13% | |
62 Neutral | $2.33B | 21.71 | -0.52% | 1.45% | -3.09% | -106.46% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
61 Neutral | $2.01B | ― | -106.83% | ― | -14.45% | 49.92% | |
55 Neutral | $1.97B | 1,381.72 | 0.13% | 0.70% | -3.93% | -97.39% | |
46 Neutral | $2.22B | 21.03 | -34.43% | 3.37% | -11.38% | -690.99% |
* Basic Materials Sector Average
IOSP
Innospec
78.78
-30.54
-27.94%
ASH
Ashland
48.66
-33.56
-40.82%
MTX
Minerals Technologies
62.73
-12.32
-16.42%
KWR
Quaker Chemical
134.04
-24.43
-15.42%
SCL
Stepan Company
49.13
-25.15
-33.86%
NGVT
Ingevity
55.01
19.12
53.27%
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.