NGVT

We rate Ingevity Corp (NGVT) as a Buy with a composite score of 66.4/100 at a current price of $71.20. The stock scores above average across the majority of our six quantitative factors and ranks #221 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (86th percentile) and momentum (72th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (31th percentile) and stability (63th percentile) tempers our overall conviction. We assign a No Moat rating (24/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Ingevity Corp holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 66.4/100 places it at rank #221 in our full 7,333-stock universe. At $2.0B in market capitalization, Ingevity Corp is a mid-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (72th percentile), revenue contraction of -15% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 38% (-4.4pp vs sector) narrow to operating margins of 5% (+3.3pp vs sector) and net margins of -12.1%, yielding a gross-to-net conversion rate of -32%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $71.20, Ingevity Corp appears undervalued relative to its fundamentals. Our value factor score of 86/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 58.9x (a 165% premium to the sector median of 22.3x), EV/EBITDA of 46.0x (at a premium), P/B of 18.8x, P/S of 1.9x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Very High uncertainty rating to Ingevity Corp. The stock exhibits multiple compounding risk factors: elevated market sensitivity (beta of 1.37), significant leverage (1228% debt-to-equity), current negative profitability (net margin -12.1%). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.37); significant leverage (1228% debt-to-equity); current negative profitability (net margin -12.1%); elevated valuation multiple (P/E 58.9x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 63th percentile and quality factor at the 72th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (63th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Ingevity Corp's capital allocation as Poor. Key concerns include low returns on equity (-137.4%), elevated leverage (1228% D/E), negative profitability, weak asset returns (ROA -10.3%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Ingevity Corp significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Ingevity Corp receives a Buy rating with a composite score of 66.4/100 (rank #221 of 7,333). Our quantitative framework assigns a No Moat (24/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a constructive view on Ingevity Corp. The combination of the current valuation, very high uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.