A month has gone by since the last earnings report for Ingevity Corporation (NGVT). Shares have added about 1.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ingevity Corporation 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 Meet, Sales Beat Estimates in Q2
Ingevity reported profits of $20.2 million or 49 cents per share in second-quarter 2020, down 64.4% from $56.8 million or $1.34 per share a year ago.
Adjusted earnings per share for the reported quarter were 63 cents, in line with the Zacks Consensus Estimate.
The company’s revenues fell 23.3% year over year to $270.6 million in the quarter on account of weaker demand, especially in the automotive industry, fueled by the economic impacts of the coronavirus pandemic. However, the top line surpassed the Zacks Consensus Estimate of $251.1 million.
Adjusted EBITDA declined 38% year over year to $67.2 million in the quarter.
Revenues from the Performance Chemicals division declined 18.9% year over year to $186.2 million in the quarter under review. Softened demand in Industrial Specialties and Oilfield Technologies was offset by relatively reasonable strength in Pavement Technologies and Engineered Polymers.
Revenues from the Performance Materials unit decreased 31.4% to $84.4 million. The sales decline in North America was partly offset by the rebounding automotive business in China.
Ingevity ended the quarter with cash and cash equivalents of $177.6 million, up 233.2% year over year. Long-term debt was $1,308.5 million, down 4% year over year.
The company reaffirmed its sales guidance for 2020 of between $1.1 billion and $1.2 billion. It also anticipates adjusted EBITDA of $310-$350 million for the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Ingevity Corporation has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ingevity Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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