Newmarket (NEU) AI Stock Analysis

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Newmarket

(NYSE:NEU)

71Outperform

Newmarket's overall stock score reflects its strong financial performance, with impressive profitability and operational improvements highlighted in the recent earnings call. The stock's valuation is attractive, with a low P/E ratio and a reasonable dividend yield. However, technical indicators suggest caution due to mixed trends and potential oversold conditions. Despite challenges in cash flow and sales declines in certain segments, the company's strategic acquisitions and financial health improvements position it well for the future.

Newmarket (NEU) vs. S&P 500 (SPY)

Market Cap

$5.17B

Dividend Yield1.88%

Average Volume (3M)58.49K

Price to Earnings (P/E)11.3

Beta (1Y)0.46

Revenue Growth3.27%

EPS Growth19.33%

CountryUS

Employees2,060

SectorBasic Materials

Sector Strength60

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)48.22

Shares Outstanding9,486,106

10 Day Avg. Volume53,522

30 Day Avg. Volume58,489

Financial Highlights & Ratios

PEG Ratio0.59

Price to Book (P/B)N/A

Price to Sales (P/S)1.82

Price to Cash Flow (P/CF)6.80

P/FCF Ratio7.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Newmarket Business Overview & Revenue Model

Company DescriptionNewMarket Corporation, through its subsidiaries, engages in the petroleum additives business. The company offers lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized; engine oil additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and engines in ocean-going vessels; driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids; and industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. It also provides fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers. In addition, the company engages in the antiknock compounds business, as well as contracted manufacturing and services activities; and owns and manages a real property in Virginia. It operates in North America, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and India. NewMarket Corporation was founded in 1887 and is headquartered in Richmond, Virginia.

How the Company Makes MoneyNewmarket makes money through a combination of subscription-based revenue models, one-time software licensing fees, and consulting services. The company offers its proprietary software solutions on a subscription basis, allowing clients to access its platforms for a recurring fee. Additionally, Newmarket generates significant revenue from licensing its software to enterprise clients, enabling them to integrate the company's technology into their existing systems. The company also provides consulting and implementation services to assist businesses in deploying and optimizing Newmarket's solutions, further contributing to its revenue streams. Strategic partnerships with industry leaders and technology providers enhance Newmarket's market reach and offerings, playing a pivotal role in its financial success.

Newmarket Financial Statement Overview

Summary

Newmarket presents a strong financial position with impressive profitability and growth in revenue and margins. The balance sheet reflects moderate leverage with effective equity utilization. However, challenges in free cash flow generation indicate potential areas for improvement. Overall, the company is financially sound with a need to address cash flow management.

Income Statement

Very Positive

Newmarket has demonstrated strong revenue growth from 2023 to 2024 with a 3.26% increase. The company also maintains a healthy gross profit margin of 31.8% and a net profit margin of 16.6% in 2024. The EBIT and EBITDA margins are robust at 21.2%, indicating efficient operational performance. Overall, Newmarket's income statement reflects a profitable and growing business.

Balance Sheet

Positive

The company's balance sheet shows a debt-to-equity ratio of 0.71, signifying a moderate level of leverage. The return on equity is strong at 31.6%, indicating effective use of shareholder funds. However, the equity ratio is 46.7%, suggesting a balanced, but not overly conservative, capital structure. While the company has moderate leverage, its strong ROE points to effective financial management.

Cash Flow

Neutral

Newmarket's cash flow statements show a decline in free cash flow from 2023 to 2024, indicating potential challenges in cash generation. The operating cash flow to net income ratio of 1.12 suggests reasonable cash conversion. However, the free cash flow to net income ratio is negative, highlighting issues in cash flow after capital expenditures. While operational cash flows are stable, the decrease in free cash flow warrants attention.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.79B	2.70B	2.76B	2.36B	2.01B
	Gross Profit
886.35M	772.51M	640.50M	547.71M	595.03M
	EBIT
590.04M	483.05M	355.14M	257.78M	311.80M
	EBITDA
758.43M	604.33M	465.22M	401.09M	441.62M
	Net Income Common Stockholders
462.41M	388.86M	279.54M	190.91M	270.57M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
77.48M	111.94M	68.71M	459.22M	125.17M
	Total Assets
3.13B	2.31B	2.41B	2.56B	1.93B
	Total Debt
1.06B	733.60M	1.07B	1.21B	660.58M
	Net Debt
981.57M	621.66M	997.56M	1.12B	535.41M
	Total Liabilities
1.67B	1.23B	1.64B	1.80B	1.17B
	Stockholders Equity
1.46B	1.08B	762.41M	762.13M	759.82M
Cash Flow		Free Cash Flow
462.27M	528.53M	59.15M	86.40M	190.84M
	Operating Cash Flow
519.59M	576.82M	115.32M	165.34M	284.15M
	Investing Cash Flow
-738.80M	-48.29M	315.89M	-461.41M	-74.24M
	Financing Cash Flow
185.81M	-487.59M	-439.36M	255.13M	-231.46M

Newmarket Technical Analysis

Technical Analysis Sentiment

Positive

Last Price545.48

Price Trends

50DMA

536.23

Positive

100DMA

529.66

Positive

200DMA

531.83

Positive

Market Momentum

MACD

6.65

Negative

RSI

63.33

Neutral

STOCH

89.28

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NEU, the sentiment is Positive. The current price of 545.48 is above the 20-day moving average (MA) of 544.60, above the 50-day MA of 536.23, and above the 200-day MA of 531.83, indicating a bullish trend. The MACD of 6.65 indicates Negative momentum. The RSI at 63.33 is Neutral, neither overbought nor oversold. The STOCH value of 89.28 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NEU.

Newmarket Risk Analysis

Newmarket disclosed 21 risk factors in its most recent earnings report. Newmarket reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Newmarket Peers Comparison

Overall Rating

UnderperformOutperform

Sector (47)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXTA	78 Outperform	$6.49B	16.74	21.49%	―	1.77%	47.48%
BCPC	74 Outperform	$5.07B	39.67	11.66%	0.56%	3.39%	17.52%
ESI	71 Outperform	$4.44B	18.18	10.30%	1.75%	5.30%	106.15%
NEU	71 Outperform	$5.17B	11.31	36.30%	1.88%	3.27%	19.33%
CBT	70 Outperform	$4.24B	10.37	31.02%	2.20%	1.71%	-2.43%
Sector *	47 Neutral	$2.36B	-2.99	-21.59%	3.58%	4.21%	-28.30%
ALB	42 Neutral	$6.88B	―	-12.18%	2.76%	-44.08%	-183.44%

* Basic Materials Sector Average

Performance Comparison

NEU

Newmarket

545.48

-57.34

-9.51%

ALB

Albemarle

58.51

-70.85

-54.77%

BCPC

Balchem

155.78

3.79

2.49%

CBT

Cabot

78.27

-14.36

-15.50%

ESI

Element Solutions

18.30

-6.74

-26.92%

AXTA

Axalta Coating Systems

29.73

-3.23

-9.80%

Newmarket Earnings Call Summary

Earnings Call Date: Feb 3, 2025 | % Change Since: 13.13% | Next Earnings Date: Apr 23, 2025

Earnings Call Sentiment Positive

The earnings call highlighted a strong increase in net income and operational efficiency improvements, as well as successful acquisition and integration of AMPAC. However, there were challenges such as decreased sales in petroleum additives and the impact of the inflationary environment. Overall, the positive developments slightly outweigh the challenges.

Highlights

Increased Net Income

Net income for Q4 2024 was $111 million or $11.56 per share, compared to $80 million or $8.38 per share for Q4 2023. Full year 2024 net income was $462 million or $48.22 per share, up from $389 million or $40.44 per share in 2023.

Operational Efficiency Improvements

Petroleum additives operating profit for Q4 2024 increased to $136 million from $110 million in Q4 2023 due to lower operating costs. Full year operating profit for 2024 was $592 million, up from $514 million in 2023.

Successful Acquisition and Performance of AMPAC

The acquisition of American Pacific Corporation was completed on January 16, 2024, and Specialty Materials sales were $27 million for Q4 2024 and $141 million for the full year, surpassing pre-acquisition expectations.

Improved Financial Health

Net debt-to-EBITDA ratio improved significantly from 1.9 at the end of Q1 2024 to 1.2 by the end of the year.

Lowlights

Decrease in Petroleum Additives Sales

Petroleum additives sales for Q4 2024 were $626 million, down from $642 million in Q4 2023. Full year sales for 2024 were $2.6 billion, a decrease from $2.7 billion in 2023.

Challenges from Inflationary Environment

Despite efforts to improve efficiency and manage costs, the company remains challenged by the ongoing inflationary environment.

Flat Shipments

Shipments were flat in 2024 compared to 2023, with a small increase in lubricant additives offset by a decline in fuel additives.

Company Guidance

During the fourth quarter of 2024, NewMarket Corporation reported a net income of $111 million, equating to $11.56 per share, an increase from $80 million or $8.38 per share in the same period of 2023. The petroleum additives segment saw sales of $626 million, down from $642 million in the previous year, yet operating profit rose to $136 million from $110 million due to lower operating costs. Full-year 2024 net income reached $462 million, or $48.22 per share, compared to $389 million or $40.44 per share in 2023. Petroleum additives' annual sales slightly decreased to $2.6 billion from $2.7 billion in 2023, but operating profit improved to $592 million from $514 million. The company also highlighted its acquisition of American Pacific Corporation, contributing $27 million in sales for the fourth quarter and $141 million for the year in its Specialty Materials segment. NewMarket returned $128 million to shareholders and improved its net debt-to-EBITDA ratio from 1.9 to 1.2 by year-end, while maintaining a focus on operational efficiency and technology investments amidst an inflationary environment.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.