Newmarket (NEU) AI Stock Analysis

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Newmarket

(NYSE:NEU)

Rating:80Outperform

Price Target:―

Newmarket scores a solid 80, reflecting strong financial performance, efficient cash generation, and robust profitability. The technical analysis indicates upward momentum but cautions near overbought levels. The stock's valuation is attractive, with a low P/E ratio and a reasonable dividend yield. Positive earnings call highlights are slightly offset by declines in certain segments and macroeconomic challenges.

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

Market Cap

$6.02B

Dividend Yield1.61%

Average Volume (3M)36.98K

Price to Earnings (P/E)12.7

Beta (1Y)0.50

Revenue Growth3.65%

EPS Growth20.92%

CountryUS

Employees2,060

SectorBasic Materials

Sector Strength67

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)13.26

Shares Outstanding9,434,506

10 Day Avg. Volume34,570

30 Day Avg. Volume36,980

Financial Highlights & Ratios

PEG Ratio2.97

Price to Book (P/B)3.95

Price to Sales (P/S)0.00

P/FCF Ratio12.46

Enterprise Value/Market Cap1.15

Enterprise Value/Revenue0.63

Enterprise Value/Gross Profit7.65

Enterprise Value/Ebitda2.38

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Newmarket Business Overview & Revenue Model

Company DescriptionNewmarket (NEU) is a leading company operating in the technology and data analytics sector. It specializes in providing innovative software solutions and platforms aimed at enhancing decision-making processes for businesses across various industries. NEU's core products include data analytics tools, artificial intelligence-driven insights, and cloud-based software services designed to optimize business operations and drive growth.

How the Company Makes MoneyNewmarket (NEU) generates revenue primarily through the sale of its software products and subscription-based services. The company offers tiered pricing models for its cloud-based solutions, allowing clients to choose packages that best suit their needs. Additionally, NEU partners with other technology firms to incorporate its analytics tools into broader enterprise solutions, earning revenue through licensing agreements and strategic partnerships. Consulting services and custom data solutions also contribute to NEU's earnings, as businesses seek tailored insights and expertise to leverage data effectively.

Newmarket Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 9.38%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mix of positive and negative aspects. While there is notable growth in the Specialty Materials segment and significant investments to expand capacity, the Petroleum Additives segment faced declines in sales and operating profit. Improvements in net income, debt ratio, and shareholder returns are positive signs, but macroeconomic challenges remain a concern.

Q1-2025 Updates

Positive Updates

Increased Net Income

Net income for the first quarter of 2025 was $126 million or $13.26 per share, compared to $108 million or $11.23 per share for the first quarter of 2024.

Growth in Specialty Materials Segment

Specialty Materials sales were $54 million for Q1 2025, compared to $17 million for Q1 2024. The operating profit was $23 million for Q1 2025, compared to an operating loss of $5 million for Q1 2024.

Strategic Capital Investment

Planned capital investment of up to $100 million at the Ampac facility in Cedar City, Utah, to increase production capacity by more than 50%.

Improved Debt Ratio

Net debt to EBITDA ratio improved to 1.1 from 1.9 at the end of Q1 2024.

Shareholder Returns

Returned $83 million to shareholders through share repurchases of $57 million and dividends of $26 million.

Negative Updates

Decrease in Petroleum Additives Sales

Petroleum additive sales fell to $646 million for Q1 2025 from $677 million for the same period in 2024.

Decrease in Operating Profit for Petroleum Additives

Operating profit for Petroleum Additives decreased to $142 million from a record $151 million in Q1 2024 due to lower shipments.

Decline in Lubricant Additive Shipments

Lubricant additive shipments decreased in Asia Pacific and North America, with only slight increases in Europe and Latin America.

Challenges in Macroeconomic Environment

Ongoing macroeconomic challenges and uncertainty around international trade relations and tariffs pose concerns.

Company Guidance

During the first quarter of 2025, NewMarket Corporation reported a net income of $126 million, or $13.26 per share, up from $108 million, or $11.23 per share, in the same period of 2024. Petroleum additive sales decreased to $646 million from $677 million in the previous year, with operating profit down to $142 million from a record $151 million, primarily due to lower shipments. The company emphasized operational efficiency to maintain strong profit levels despite shipment declines. In contrast, the Specialty Materials segment saw significant growth, with sales rising to $54 million from $17 million and operating profit reaching $23 million, compared to a $5 million loss in the previous year. The company announced a $100 million capital investment to expand production at the Ampac facility in Utah, enhancing capacity for solid rocket motors. Throughout the quarter, NewMarket generated robust cash flows, returning $83 million to shareholders through share repurchases and dividends, and improved its net debt to EBITDA ratio to 1.1, down from 1.9 in Q1 2024. The corporation remains focused on long-term objectives, driven by core principles such as customer-focused solutions and technology-driven products.

Newmarket Financial Statement Overview

Summary

Newmarket presents a strong overall financial profile with consistent revenue growth, robust profitability, and efficient cash generation. The balance sheet structure is stable, supporting long-term financial health. The company's ability to manage debt and sustain growth in cash flows underlines its resilience in the specialty chemicals industry, positioning it well for future opportunities.

Income Statement

Very Positive

Newmarket demonstrates strong profitability with a consistent gross profit margin of around 32% and a net profit margin of approximately 17%. The company shows a healthy revenue growth rate of 3.4% in the TTM period compared to the previous year. The EBIT and EBITDA margins are robust, indicating efficient operations and cost management. Overall, the income statement reflects a stable and growing financial performance.

Balance Sheet

Positive

The balance sheet is relatively strong, with a debt-to-equity ratio of 0.70, indicating manageable leverage. Return on Equity (ROE) is impressive at 31.6%, reflecting efficient use of equity. The equity ratio stands at 47%, showcasing a balanced capital structure with a significant equity buffer. While overall stability is evident, continuous monitoring of debt levels is advisable to maintain financial health.

Cash Flow

Positive

Cash flow performance is solid, with a free cash flow growth rate of 3.9% in the TTM period, highlighting strong cash generation. The operating cash flow to net income ratio is 1.12, indicating good cash conversion from earnings. The free cash flow to net income ratio of 1.00 further supports the company's ability to generate cash relative to its earnings. This cash flow strength reinforces the company's operational efficiency.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.79B	2.79B	2.70B	2.76B	2.36B	2.01B
	Gross Profit
906.00M	886.35M	772.51M	640.50M	547.71M	595.03M
	EBIT
609.11M	590.04M	483.05M	355.14M	257.78M	311.80M
	EBITDA
782.87M	758.43M	604.33M	465.22M	401.09M	441.62M
	Net Income Common Stockholders
480.63M	462.41M	388.86M	279.54M	190.91M	270.57M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
117.07M	77.48M	111.94M	68.71M	459.22M	125.17M
	Total Assets
3.16B	3.13B	2.31B	2.41B	2.56B	1.93B
	Total Debt
1.35B	1.06B	733.60M	1.07B	1.21B	660.58M
	Net Debt
1.24B	981.57M	621.66M	997.56M	1.12B	535.41M
	Total Liabilities
2.01B	1.67B	1.23B	1.64B	1.80B	1.17B
	Stockholders Equity
1.15B	1.46B	1.08B	762.41M	762.13M	759.82M
Cash Flow		Free Cash Flow
480.30M	462.27M	528.53M	59.15M	86.40M	190.84M
	Operating Cash Flow
537.07M	519.59M	576.82M	115.32M	165.34M	284.15M
	Investing Cash Flow
-54.33M	-738.80M	-48.29M	315.89M	-461.41M	-74.24M
	Financing Cash Flow
-484.05M	185.81M	-487.59M	-439.36M	255.13M	-231.46M

Newmarket Technical Analysis

Technical Analysis Sentiment

Positive

Last Price630.05

Price Trends

50DMA

602.11

Positive

100DMA

564.04

Positive

200DMA

548.99

Positive

Market Momentum

MACD

9.23

Positive

RSI

56.92

Neutral

STOCH

37.65

Neutral

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 630.05 is below the 20-day moving average (MA) of 640.52, above the 50-day MA of 602.11, and above the 200-day MA of 548.99, indicating a neutral trend. The MACD of 9.23 indicates Positive momentum. The RSI at 56.92 is Neutral, neither overbought nor oversold. The STOCH value of 37.65 is Neutral, 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 1 New Risks

A significant portion of our specialty materials business is under contracts with contractors or subcontractors of the U.S. government. These contracts are impacted by governmental priorities and are subject to potential fluctuations in funding or early termination, including for convenience, any of which could have a material adverse effect on our results of operations, financial condition, or cash flows. Q4, 2024

Newmarket Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NEU	80 Outperform	$6.02B	12.70	35.85%	1.61%	3.65%	20.92%
BCPC	78 Outperform	$5.42B	39.64	11.94%	0.52%	3.76%	18.06%
AXTA	77 Outperform	$6.70B	15.01	23.59%	―	0.96%	82.78%
CBT	73 Outperform	$4.04B	9.74	30.57%	2.31%	-0.05%	-2.76%
ESI	73 Outperform	$5.19B	18.16	11.75%	1.48%	6.08%	117.61%
ALB	51 Neutral	$6.71B	―	-10.58%	2.71%	-39.34%	-500.52%
Sector *	51 Neutral	$2.02B	-1.12	-21.36%	3.65%	2.87%	-30.54%

* Basic Materials Sector Average

Performance Comparison

NEU

Newmarket

639.03

111.71

21.18%

ALB

Albemarle

58.64

-57.45

-49.49%

BCPC

Balchem

165.54

12.51

8.17%

CBT

Cabot

74.95

-21.45

-22.25%

ESI

Element Solutions

21.26

-2.10

-8.99%

AXTA

Axalta Coating Systems

30.31

-5.96

-16.43%

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.