Ingevity Corporation’s NGVT stock looks promising at the moment. Its shares have popped roughly 40% over the past three months. NGVT is expected to benefit from the strategic repositioning of its Performance Chemicals segment, strategic acquisitions and actions to drive growth.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it is poised to carry the momentum ahead.

Let's see what makes NGVT stock an attractive investment option at the moment.

NGVT’s Earnings Estimates Northbound

Earnings estimates for NGVT for 2024 have been going up over the past 60 days, reflecting analysts’ optimism. The Zacks Consensus Estimate for the current year has increased by 15.9%.

NGVT’s Positive Earnings Surprise History

Ingevity has outpaced the Zacks Consensus Estimate in three of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 95.4%, on average.

Ingevity’s Superior Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Ingevity is 24.5%, above the industry’s level of 16.1%.

Strategic Repositioning and Acquisitions to Aid NGVT

Ingevity is taking several actions to expand capacity and drive long-term growth. It remains committed to investing organically. Ingevity is also committed to capturing the maximum value for its products.

The company is expected to benefit from the repositioning of its Performance Chemicals segment, which is aimed at lowering exposure to lower-margin end markets. The move includes consolidating segment operations at its North Charleston facility by moving oleo chemical refining to the North Charleston site’s secondary refinery as well as the closure of its Crossett facility. These actions further simplify the segment’s manufacturing footprint and create significant cost savings. NGVT expects this manufacturing consolidation to result in around $20-$25 million in annual savings beginning in 2025.

During the third quarter, the company began to notice the benefits of the repositioning. Ingevity’s focus over the next few quarters will be on execution to ensure that it maximizes the benefits of its approach. Operational improvements leading to lower input costs and better manufacturing efficiency are also aiding performance in its Performance Materials unit. 

The acquisition of the Capa caprolactone business enabled the company with a new technology platform to drive revenue and earnings growth. Capa has a strong and market-leading business that focuses on high-growth end-use applications. NGVT, in July 2024, expanded its Capa caprolactone distribution network by selecting Ultrapolymers Group as the distributor for Capa Bioplastics in Europe. The acquisition of Ozark Materials has also strengthened the company’s position in the paving construction industry.

Ingevity Corporation Price and Consensus

Ingevity Corporation price-consensus-chart | Ingevity Corporation Quote

NGVT’s Zacks Rank & Other Key Picks

NGVT currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Basic Materials space are Methanex Corporation MEOH, Axalta Coating Systems Ltd. AXTA and DuPont de Nemours, Inc. DD, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Methanex’s current-year earnings has increased by 20.7% in the past 60 days. MEOH beat the consensus estimate in each of the last four quarters with the average surprise being 101%. Its shares have gained roughly 7% in the past year.

The Zacks Consensus Estimate for Axalta Coating’s current year earnings is pegged at $2.15, indicating a rise of 36.9% from year-ago levels. The Zacks Consensus Estimate for AXTA’s current year earnings has increased 3.9% in the past 60 days. The stock has rallied around 17% in the past year. 

DuPont beat the consensus estimate in each of the last four quarters with the average earnings surprise being 12.9%. DD’s shares have gained roughly 14% in the past year.

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