Intrinsic value of Innospec - IOSP

Previous Close

$64.40

  Intrinsic Value

$891.10

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

-58%

Previous close

$64.40

 
Intrinsic value

$891.10

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

-58%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of IOSP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -12.75
  38.70
  35.33
  32.30
  29.57
  27.11
  24.90
  22.91
  21.12
  19.51
  18.06
  16.75
  15.58
  14.52
  13.57
  12.71
  11.94
  11.24
  10.62
  10.06
  9.55
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
Revenue, $m
  883
  1,225
  1,657
  2,193
  2,841
  3,611
  4,510
  5,544
  6,715
  8,024
  9,473
  11,060
  12,783
  14,638
  16,624
  18,737
  20,974
  23,333
  25,810
  28,407
  31,120
  33,951
  36,901
  39,970
  43,163
  46,481
  49,929
  53,513
  57,237
  61,109
  65,134
Variable operating expenses, $m
 
  726
  970
  1,271
  1,636
  2,069
  2,575
  3,156
  3,815
  4,551
  5,366
  6,222
  7,191
  8,235
  9,352
  10,540
  11,799
  13,125
  14,519
  15,980
  17,506
  19,099
  20,758
  22,484
  24,280
  26,147
  28,087
  30,103
  32,198
  34,376
  36,640
Fixed operating expenses, $m
 
  256
  263
  269
  276
  283
  290
  297
  305
  312
  320
  328
  336
  345
  353
  362
  371
  380
  390
  400
  410
  420
  430
  441
  452
  463
  475
  487
  499
  512
  524
Total operating expenses, $m
  778
  982
  1,233
  1,540
  1,912
  2,352
  2,865
  3,453
  4,120
  4,863
  5,686
  6,550
  7,527
  8,580
  9,705
  10,902
  12,170
  13,505
  14,909
  16,380
  17,916
  19,519
  21,188
  22,925
  24,732
  26,610
  28,562
  30,590
  32,697
  34,888
  37,164
Operating income, $m
  105
  242
  425
  653
  929
  1,259
  1,646
  2,091
  2,595
  3,161
  3,787
  4,510
  5,256
  6,059
  6,919
  7,835
  8,804
  9,827
  10,901
  12,027
  13,204
  14,433
  15,712
  17,045
  18,430
  19,870
  21,368
  22,923
  24,540
  26,222
  27,970
EBITDA, $m
  143
  304
  495
  734
  1,023
  1,369
  1,773
  2,238
  2,766
  3,358
  4,012
  4,730
  5,510
  6,350
  7,250
  8,207
  9,221
  10,291
  11,414
  12,592
  13,823
  15,107
  16,446
  17,839
  19,288
  20,794
  22,360
  23,987
  25,678
  27,436
  29,264
Interest expense (income), $m
  3
  9
  16
  25
  36
  49
  65
  83
  104
  128
  155
  184
  217
  252
  290
  330
  374
  419
  467
  518
  571
  626
  684
  744
  807
  872
  940
  1,010
  1,083
  1,159
  1,238
Earnings before tax, $m
  103
  233
  409
  628
  894
  1,210
  1,581
  2,007
  2,491
  3,033
  3,632
  4,326
  5,039
  5,807
  6,629
  7,504
  8,431
  9,408
  10,434
  11,509
  12,634
  13,806
  15,028
  16,300
  17,623
  18,998
  20,428
  21,913
  23,457
  25,062
  26,731
Tax expense, $m
  22
  63
  110
  169
  241
  327
  427
  542
  673
  819
  981
  1,168
  1,361
  1,568
  1,790
  2,026
  2,276
  2,540
  2,817
  3,108
  3,411
  3,728
  4,058
  4,401
  4,758
  5,130
  5,515
  5,917
  6,333
  6,767
  7,218
Net income, $m
  81
  170
  298
  458
  652
  884
  1,154
  1,465
  1,818
  2,214
  2,651
  3,158
  3,678
  4,239
  4,840
  5,478
  6,155
  6,868
  7,617
  8,402
  9,222
  10,079
  10,971
  11,899
  12,865
  13,869
  14,912
  15,997
  17,124
  18,295
  19,514

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  102
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,181
  1,497
  2,026
  2,681
  3,473
  4,415
  5,514
  6,777
  8,208
  9,810
  11,581
  13,521
  15,627
  17,895
  20,323
  22,906
  25,641
  28,524
  31,553
  34,727
  38,044
  41,505
  45,111
  48,863
  52,766
  56,823
  61,039
  65,419
  69,972
  74,705
  79,626
Adjusted assets (=assets-cash), $m
  1,079
  1,497
  2,026
  2,681
  3,473
  4,415
  5,514
  6,777
  8,208
  9,810
  11,581
  13,521
  15,627
  17,895
  20,323
  22,906
  25,641
  28,524
  31,553
  34,727
  38,044
  41,505
  45,111
  48,863
  52,766
  56,823
  61,039
  65,419
  69,972
  74,705
  79,626
Revenue / Adjusted assets
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
  0.818
Average production assets, $m
  274
  380
  514
  680
  881
  1,119
  1,398
  1,719
  2,082
  2,488
  2,937
  3,429
  3,963
  4,538
  5,154
  5,809
  6,502
  7,233
  8,001
  8,806
  9,647
  10,525
  11,439
  12,391
  13,380
  14,409
  15,478
  16,589
  17,744
  18,944
  20,192
Working capital, $m
  258
  233
  315
  417
  540
  686
  857
  1,053
  1,276
  1,525
  1,800
  2,101
  2,429
  2,781
  3,159
  3,560
  3,985
  4,433
  4,904
  5,397
  5,913
  6,451
  7,011
  7,594
  8,201
  8,831
  9,487
  10,167
  10,875
  11,611
  12,376
Total debt, $m
  273
  460
  712
  1,025
  1,403
  1,852
  2,376
  2,979
  3,661
  4,425
  5,270
  6,195
  7,200
  8,282
  9,440
  10,672
  11,977
  13,352
  14,797
  16,311
  17,893
  19,544
  21,264
  23,054
  24,915
  26,850
  28,861
  30,951
  33,123
  35,380
  37,728
Total liabilities, $m
  528
  714
  966
  1,279
  1,657
  2,106
  2,630
  3,233
  3,915
  4,679
  5,524
  6,449
  7,454
  8,536
  9,694
  10,926
  12,231
  13,606
  15,051
  16,565
  18,147
  19,798
  21,518
  23,308
  25,169
  27,104
  29,115
  31,205
  33,377
  35,634
  37,982
Total equity, $m
  654
  783
  1,060
  1,402
  1,816
  2,309
  2,884
  3,544
  4,293
  5,130
  6,057
  7,071
  8,173
  9,359
  10,629
  11,980
  13,410
  14,918
  16,502
  18,162
  19,897
  21,707
  23,593
  25,556
  27,597
  29,718
  31,923
  34,214
  36,596
  39,071
  41,645
Total liabilities and equity, $m
  1,182
  1,497
  2,026
  2,681
  3,473
  4,415
  5,514
  6,777
  8,208
  9,809
  11,581
  13,520
  15,627
  17,895
  20,323
  22,906
  25,641
  28,524
  31,553
  34,727
  38,044
  41,505
  45,111
  48,864
  52,766
  56,822
  61,038
  65,419
  69,973
  74,705
  79,627
Debt-to-equity ratio
  0.417
  0.590
  0.670
  0.730
  0.770
  0.800
  0.820
  0.840
  0.850
  0.860
  0.870
  0.880
  0.880
  0.880
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.900
  0.910
  0.910
  0.910
Adjusted equity ratio
  0.512
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523
  0.523

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  81
  170
  298
  458
  652
  884
  1,154
  1,465
  1,818
  2,214
  2,651
  3,158
  3,678
  4,239
  4,840
  5,478
  6,155
  6,868
  7,617
  8,402
  9,222
  10,079
  10,971
  11,899
  12,865
  13,869
  14,912
  15,997
  17,124
  18,295
  19,514
Depreciation, amort., depletion, $m
  38
  62
  70
  81
  94
  109
  127
  148
  171
  197
  226
  220
  254
  291
  330
  372
  417
  464
  513
  564
  618
  675
  733
  794
  858
  924
  992
  1,063
  1,137
  1,214
  1,294
Funds from operations, $m
  93
  232
  369
  539
  746
  993
  1,281
  1,613
  1,989
  2,411
  2,877
  3,378
  3,932
  4,530
  5,170
  5,851
  6,571
  7,331
  8,130
  8,966
  9,841
  10,753
  11,704
  12,694
  13,723
  14,793
  15,904
  17,060
  18,261
  19,510
  20,808
Change in working capital, $m
  -12
  65
  82
  102
  123
  146
  171
  196
  222
  249
  275
  301
  327
  353
  377
  401
  425
  448
  471
  493
  516
  538
  560
  583
  607
  630
  655
  681
  708
  736
  765
Cash from operations, $m
  105
  167
  287
  438
  623
  846
  1,110
  1,417
  1,767
  2,162
  2,602
  3,076
  3,605
  4,178
  4,793
  5,449
  6,146
  6,883
  7,659
  8,473
  9,325
  10,215
  11,144
  12,110
  13,116
  14,162
  15,249
  16,379
  17,554
  18,774
  20,043
Maintenance CAPEX, $m
  0
  -18
  -24
  -33
  -44
  -56
  -72
  -90
  -110
  -133
  -159
  -188
  -220
  -254
  -291
  -330
  -372
  -417
  -464
  -513
  -564
  -618
  -675
  -733
  -794
  -858
  -924
  -992
  -1,063
  -1,137
  -1,214
New CAPEX, $m
  -17
  -106
  -134
  -166
  -201
  -239
  -279
  -320
  -363
  -406
  -449
  -492
  -534
  -575
  -616
  -655
  -693
  -731
  -768
  -805
  -841
  -878
  -914
  -952
  -990
  -1,029
  -1,069
  -1,111
  -1,155
  -1,200
  -1,248
Cash from investing activities, $m
  -209
  -124
  -158
  -199
  -245
  -295
  -351
  -410
  -473
  -539
  -608
  -680
  -754
  -829
  -907
  -985
  -1,065
  -1,148
  -1,232
  -1,318
  -1,405
  -1,496
  -1,589
  -1,685
  -1,784
  -1,887
  -1,993
  -2,103
  -2,218
  -2,337
  -2,462
Free cash flow, $m
  -104
  43
  128
  239
  379
  551
  760
  1,007
  1,294
  1,622
  1,993
  2,396
  2,851
  3,348
  3,886
  4,464
  5,080
  5,735
  6,427
  7,155
  7,920
  8,719
  9,555
  10,425
  11,332
  12,276
  13,257
  14,276
  15,336
  16,437
  17,581
Issuance/(repayment) of debt, $m
  137
  199
  252
  312
  378
  449
  524
  603
  683
  764
  845
  925
  1,005
  1,082
  1,158
  1,232
  1,304
  1,375
  1,445
  1,514
  1,582
  1,651
  1,720
  1,790
  1,862
  1,935
  2,011
  2,090
  2,172
  2,258
  2,347
Issuance/(repurchase) of shares, $m
  -6
  49
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  87
  248
  252
  312
  378
  449
  524
  603
  683
  764
  845
  925
  1,005
  1,082
  1,158
  1,232
  1,304
  1,375
  1,445
  1,514
  1,582
  1,651
  1,720
  1,790
  1,862
  1,935
  2,011
  2,090
  2,172
  2,258
  2,347
Total cash flow (excl. dividends), $m
  -19
  291
  380
  551
  757
  1,000
  1,284
  1,609
  1,977
  2,386
  2,838
  3,321
  3,856
  4,430
  5,044
  5,696
  6,385
  7,111
  7,872
  8,669
  9,502
  10,370
  11,275
  12,215
  13,194
  14,211
  15,267
  16,366
  17,507
  18,694
  19,929
Retained Cash Flow (-), $m
  -49
  -219
  -277
  -342
  -415
  -492
  -575
  -661
  -749
  -837
  -926
  -1,015
  -1,101
  -1,187
  -1,270
  -1,351
  -1,430
  -1,508
  -1,584
  -1,660
  -1,735
  -1,810
  -1,886
  -1,963
  -2,041
  -2,122
  -2,205
  -2,291
  -2,381
  -2,475
  -2,574
Prev. year cash balance distribution, $m
 
  90
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  162
  104
  209
  342
  508
  709
  949
  1,228
  1,549
  1,912
  2,307
  2,754
  3,244
  3,774
  4,345
  4,955
  5,603
  6,288
  7,009
  7,767
  8,560
  9,389
  10,253
  11,153
  12,089
  13,063
  14,075
  15,126
  16,219
  17,355
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  156
  95
  181
  282
  394
  515
  641
  768
  890
  1,002
  1,095
  1,175
  1,233
  1,267
  1,276
  1,259
  1,219
  1,158
  1,079
  987
  885
  779
  672
  568
  470
  381
  302
  234
  177
  131
Current shareholders' claim on cash, %
  100
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3
  96.3

Innospec Inc. develops, manufactures, blends, markets, and supplies fuel additives, oilfield chemicals, personal care products, and other specialty chemicals to oil and gas exploration and production, oil refinery, fuel users, personal care formulation, home care, agrochemical and mining formulation, and other chemical and industrial companies worldwide. It operates through four segments: Fuel Specialties, Performance Chemicals, Oilfield Services, and Octane Additives. The Fuel Specialties segment offers a range of specialty chemical products used as additives in various fuels. This segmentÂ’s products are used in the operation of automotive, marine, and aviation engines; power station generators; and heating oil. The Performance Chemicals segment provides technology-based solutions for its customersÂ’ processes or products focused in the personal care, home care, agrochemical, and mining markets. The Oilfield Services segment develops and markets products to prevent loss of mud in drilling operations; chemical solutions for fracturing and stimulation operations; and products for oil and gas production, which enable flow assurance and asset integrity. The Octane Additives segment produces and sells tetra ethyl lead (TEL) for use in automotive gasoline. This segment is also involved in an environmental remediation business that manages the cleanup of redundant TEL plants. 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.

FINANCIAL RATIOS  of  Innospec (IOSP)

Valuation Ratios
P/E Ratio 19.1
Price to Sales 1.8
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 14.8
Price to Free Cash Flow 17.6
Growth Rates
Sales Growth Rate -12.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -34.6%
Cap. Spend. - 3 Yr. Gr. Rate -4.1%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 39.9%
Total Debt to Equity 41.7%
Interest Coverage 35
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 9.7%
Return On Total Capital 9.7%
Ret/ On T. Cap. - 3 Yr. Avg. 13.6%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. 17.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 37.6%
Gross Margin - 3 Yr. Avg. 34.4%
EBITDA Margin 16.3%
EBITDA Margin - 3 Yr. Avg. 16.6%
Operating Margin 11.9%
Oper. Margin - 3 Yr. Avg. 13%
Pre-Tax Margin 11.7%
Pre-Tax Margin - 3 Yr. Avg. 12.7%
Net Profit Margin 9.2%
Net Profit Margin - 3 Yr. Avg. 9.9%
Effective Tax Rate 21.4%
Eff/ Tax Rate - 3 Yr. Avg. 22.2%
Payout Ratio 19.8%

IOSP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IOSP stock intrinsic value calculation we used $883 million for the last fiscal year's total revenue generated by Innospec. The default revenue input number comes from 2016 income statement of Innospec. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IOSP stock valuation model: a) initial revenue growth rate of 38.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for IOSP is calculated based on our internal credit rating of Innospec, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Innospec.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IOSP stock the variable cost ratio is equal to 60.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $250 million in the base year in the intrinsic value calculation for IOSP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Innospec.

Corporate tax rate of 27% is the nominal tax rate for Innospec. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IOSP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IOSP are equal to 31%.

Life of production assets of 15.6 years is the average useful life of capital assets used in Innospec operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IOSP is equal to 19%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $654 million for Innospec - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 23.304 million for Innospec is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Innospec at the current share price and the inputted number of shares is $1.5 billion.

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COMPANY NEWS

▶ ETFs with exposure to Innospec, Inc. : July 13, 2017   [Jul-13-17 04:06PM  Capital Cube]
▶ ETFs with exposure to Innospec, Inc. : June 19, 2017   [Jun-19-17 03:33PM  Capital Cube]
▶ Innospec Invests in Dried Surfactants   [Jun-01-17 04:45PM  GlobeNewswire]
▶ Innospec posts 1Q profit   [May-09-17 07:44PM  Associated Press]
▶ ETFs with exposure to Innospec, Inc. : April 7, 2017   [Apr-07-17 04:54PM  Capital Cube]
▶ Innospec posts 4Q profit   [Feb-14-17 05:29PM  Associated Press]
▶ Innospec Inc. (IOSP): Hedge Funds Remain Overweight   [Dec-02-16 12:43PM  at Insider Monkey]
▶ Innospec Reports Third Quarter 2016 Financial Results   [Nov-02-16 04:45PM  GlobeNewswire]
▶ Innospec Publishes 2015 Sustainability Report   [Oct-21-16 04:37AM  GlobeNewswire]
▶ *** DATA NOT AVAILABLE ***   [Sep-01-16 02:03PM  at noodls]
Stock chart of IOSP Financial statements of IOSP Annual reports of IOSP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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