Ingevity Corp (NGVT) stock intrinsic value fair value estimate & owner earnings analysis

Ingevity makes three things. Its largest and most profitable business, Performance Materials (about $607M of 2025 sales, segment EBITDA of $326M, a 53.8% margin), sells specialised activated carbon used in the fuel-vapor canisters of gasoline and hybrid vehicles. Performance Chemicals (about $400M) sells additives for road paving (pavement technologies, $303M) and road markings ($98M). Advanced Polymer Technologies (about $160M) makes caprolactone-based specialty polymers. On January 1, 2026 Ingevity completed the sale of its industrial specialties product line and its North Charleston crude tall oil refinery, which were presented as discontinued operations. Management is now exploring a sale of Advanced Polymer Technologies and the road markings line, targeted for the end of 2026. We value the business as it stands today, and we credit no sale proceeds because we could not establish a price from the annual report. How we measure earnings. We start from operating cash flow, remove swings in receivables, inventory and payables, and deduct stock compensation and the capital spending needed just to stand still. On that basis owner earnings per share were $5.87 in 2025, $(0.27) in 2024 and $2.57 in 2023. 2024 was distorted by a $100M payment to terminate a crude tall oil supply contract plus crude tall oil resale outflows, and 2023 by heavy restructuring and resale costs tied to the business since sold. Earlier years included industrial specialties earnings that no longer belong to the company. We therefore use 2025, the year in which the crude tall oil contract payment was behind the company and the sold business was close to break-even, as the earnings level, and we do not credit any growth from it: sales were flat to slightly lower in 2025 and in the first half of 2026 ($572.1M versus $579.4M a year earlier). The one-year change in owner earnings is not meaningful given the 2024 distortion, so year one is held flat. Base case ($57.7 per share): owner earnings stay at about $5.87 a share for ten years, then fade in a straight line to zero over the following fifteen years. Performance Materials sales have been steady at $586M, $610M and $607M over the last three years, and its EBITDA of $303M, $333M and $326M shows the same stability. The fade reflects that the segment's profits come mainly from gasoline and hybrid vehicles, and the company itself expects global combustion-engine production to be lower in 2026 than in 2025. From this we deduct the roughly $95.4M BASF antitrust judgment (about $2.63 a share), which Ingevity lost on appeal on February 11, 2026 and expected to pay in the second quarter of 2026. BASF may also seek legal fees, which we have not included because no amount has been stated. Bear case ($35.8 per share): three named pressures. First, about $1.2 billion of borrowings and leases, including $517M under a revolving facility that matures on June 23, 2027 and $550M of 3.88% notes due 2028, must be refinanced. We assume the notes reprice to about the 6.4% the revolver cost in 2025, which costs roughly $0.29 a share a year after tax. Second, Advanced Polymer Technologies, whose 2025 sales fell 15% amid Chinese competition, loses about half of its $32.1M of EBITDA (roughly $0.34 a share after tax). Third, Performance Materials profits erode about 5% a year for ten years and then fade to zero over ten years. The company also wrote off $183.8M of Advanced Polymer goodwill in 2025, $306.6M of goodwill in 2024 and $109.3M of road markings assets in 2025, which argues against assuming any recovery of that money. The BASF payment is deducted. Bull case ($65.6 per share): Ingevity removes the roughly $15M of leftover overhead from the sold business, as it has said it will during 2026 (about $0.32 a share after tax), lifting owner earnings to about $6.20. Performance Materials then holds its profits for ten years, and the fade lasts twenty years. Growth in pavement technologies and any recovery in polymer demand are management expectations, not contracted, so they are left out. The BASF payment is deducted. What could make this wrong: a faster shift away from gasoline and hybrid vehicles, a costly refinancing, a large legal fee award, or the sale of the two remaining lines at prices that fall short of the value we place on their earnings. Cash flow in the first half of 2026 was negative $15.8M versus positive $104.4M a year earlier; the annual report expected the BASF payment in that period, but we have not separately confirmed the reason for the swing. Estimates are per share on about 36.2 million diluted shares, discounted at 6% a year.