Value
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.1 |
| P/S | 9.6 |
| EV/EBITDA | 6.1 |
| Fwd P/E | 8.4 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 13.7x
- ▸PEG: 0.42
- ▸Attractively valued
IOSP · Why this verdict
Why Innospec (IOSP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A forward price-to-earnings of 13.9x and a PEG of 0.42 suggest the market is pricing in little credit for the company's earnings growth trajectory — a value that looks inexpensive relative to peers where the P/E is noted as attractive. Valuation breakdown | Forward P/E remains below 18x as earnings grow, maintaining the valuation discount relative to the peer group. | →Stable |
| CounterThe 'attractively valued' characterization rests on earnings estimates that carry moderate reliability given the erratic FCF conversion; if earnings quality degrades, the apparent cheapness may prove illusory. | ||
The stock is 1.1% below the resistance target with a reward-to-risk ratio of 0.25-to-1 — potential downside exceeds available upside by four times, making the current price unattractive for a new position regardless of the positive technical and fundamental backdrop. Price targets | A price pullback that creates at least 7% headroom to the $86.06 resistance level would restore a more actionable risk/reward profile. | →Stable |
| CounterA breakout setup with strong momentum can push past prior resistance levels, rendering the current target stale and opening room to a higher ceiling; waiting for a pullback risks missing a continuation move. | ||
A golden cross, RSI at 65, and a bullish MACD signal with the stock above all major moving averages confirm a genuine technical breakout — momentum at this reading historically precedes continued near-term strength, and volume accumulation supports the move. Chart pattern detection | The golden cross pattern holds and price sustains above all major moving averages for at least 8 consecutive weeks. | →Stable |
| CounterThe stock sits well above the $55 maximum pain level, and an elevated put/call ratio of 1.64 signals that options traders are positioned for a reversal; contrarian bearish positioning at extended levels can act as a ceiling on further advances. | ||
Four consecutive earnings beats with an average upside surprise of roughly 8.5% indicates the company is reliably delivering results above what analysts expect — a cadence of steady, modest beats is characteristic of a well-managed business with disciplined guidance. Earnings | The beat streak extends to at least 6 consecutive quarters, with each quarter delivering a positive earnings surprise. | →Stable |
| CounterThe most recent beat was narrow at 3.45%, and the average surprise of 8.5% is modest by cyclical-industrials standards; the streak reflects consistency but not exceptional outperformance, and a softer operating quarter could easily end it. | ||
Free cash flow represents only 11% of net income — despite positive reported earnings, almost none of that profit is converting into actual cash, raising questions about the quality and durability of the earnings stream. Quality breakdown | FCF-to-net-income ratio rises above 50% for 2 consecutive reported quarters, validating that earnings are translating into real cash generation. | →Stable |
| CounterLow FCF/NI can reflect temporary working capital investment or timing differences rather than structural impairment; a Piotroski F-Score of 7 out of 9 signals that the broader balance sheet remains healthy despite the weak cash conversion metric. | ||
A forward price-to-earnings of 13.9x and a PEG of 0.42 suggest the market is pricing in little credit for the company's earnings growth trajectory — a value that looks inexpensive relative to peers where the P/E is noted as attractive.
→StableValuation breakdown
- Expectation
- Forward P/E remains below 18x as earnings grow, maintaining the valuation discount relative to the peer group.
CounterThe 'attractively valued' characterization rests on earnings estimates that carry moderate reliability given the erratic FCF conversion; if earnings quality degrades, the apparent cheapness may prove illusory.
The stock is 1.1% below the resistance target with a reward-to-risk ratio of 0.25-to-1 — potential downside exceeds available upside by four times, making the current price unattractive for a new position regardless of the positive technical and fundamental backdrop.
→StablePrice targets
- Expectation
- A price pullback that creates at least 7% headroom to the $86.06 resistance level would restore a more actionable risk/reward profile.
CounterA breakout setup with strong momentum can push past prior resistance levels, rendering the current target stale and opening room to a higher ceiling; waiting for a pullback risks missing a continuation move.
A golden cross, RSI at 65, and a bullish MACD signal with the stock above all major moving averages confirm a genuine technical breakout — momentum at this reading historically precedes continued near-term strength, and volume accumulation supports the move.
→StableChart pattern detection
- Expectation
- The golden cross pattern holds and price sustains above all major moving averages for at least 8 consecutive weeks.
CounterThe stock sits well above the $55 maximum pain level, and an elevated put/call ratio of 1.64 signals that options traders are positioned for a reversal; contrarian bearish positioning at extended levels can act as a ceiling on further advances.
Four consecutive earnings beats with an average upside surprise of roughly 8.5% indicates the company is reliably delivering results above what analysts expect — a cadence of steady, modest beats is characteristic of a well-managed business with disciplined guidance.
→StableEarnings
- Expectation
- The beat streak extends to at least 6 consecutive quarters, with each quarter delivering a positive earnings surprise.
CounterThe most recent beat was narrow at 3.45%, and the average surprise of 8.5% is modest by cyclical-industrials standards; the streak reflects consistency but not exceptional outperformance, and a softer operating quarter could easily end it.
Free cash flow represents only 11% of net income — despite positive reported earnings, almost none of that profit is converting into actual cash, raising questions about the quality and durability of the earnings stream.
→StableQuality breakdown
- Expectation
- FCF-to-net-income ratio rises above 50% for 2 consecutive reported quarters, validating that earnings are translating into real cash generation.
CounterLow FCF/NI can reflect temporary working capital investment or timing differences rather than structural impairment; a Piotroski F-Score of 7 out of 9 signals that the broader balance sheet remains healthy despite the weak cash conversion metric.
TrendMatrix Research · core thesis
Engine thesis — one sentence
IOSP shows a technically confirmed breakout with four consecutive earnings beats and an attractive forward valuation at 13.9x earnings — but the stock is within 1.1% of its resistance target at a 0.25-to-1 risk/reward, free cash flow converts at only 11% of net income, and options traders are positioned defensively; the setup warrants patience for a better entry rather than action at the current price.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.9 |
| ROA | 3.4 |
| Gross margin | 1.5 |
| Op margin | 2.8 |
| Net margin | 3.2 |
| Current ratio | 10.0 |
| FCF quality | 0.8 |
| Moat | 3.8 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: 11% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.2 |
| EPS growth | 8.5 |
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.6 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.3 |
- ▸Uptrend pullback (RSI 39) - buy opportunity
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.8 |
| Price target | 7.6 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (3.0) — signal dampened
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.8 |
| quality rank | 4.9 |
| growth rank | 3.8 |
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.5 |
| support resistance | 6.1 |
| 52w position | 8.2 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 8.7 |
| volatility | 6.0 |
| implied vol | 5.7 |
| beta | 7.5 |
| debt equity | 1.3 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.8 |
| dividend safety | 7.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 215.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.4>=4.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.3<1.5@spot
Warning (2)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.31
Upside
+1.6%
Downside
5.2%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.0B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.3<1.5@spot) reinforce the read. Current asymmetry R:R is 0.31 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 7.7, Catalyst at 6.8, and Sentiment at 6.6; the weakest are Peer rank at 3.8, Quality at 4.0, and Insider at 5.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.31 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Technical Breakout Momentum
Trip ifPrice falls below the 200-day moving average for 5 consecutive trading sessions, negating the breakout.
- P2Consistent Earnings Beat Streak
Trip ifEPS surprise falls below 0% for any single reported quarter, ending the beat streak.
- P3Attractive Forward Valuation
Trip ifForward P/E rises above 20x from the current 13.9x.
- P4Weak Cash Conversion Quality
Trip ifFCF-to-net-income ratio rises above 50% for 2 consecutive reported quarters.
- P5Price At Resistance Poor Entry Geometry
Trip ifStock price retreats to a level that creates at least 7% headroom to the $86.06 resistance target (below approximately $80.40).