Stepan Company (SCL) AI Stock Analysis

• Market Cap: $1.13B
• Dividend Yield: 3.33%
• Average Volume (3M): 171.84K
• Price to Earnings (P/E): 23.1
• Beta (1Y): 1.13
• Revenue Growth: 5.35%
• EPS Growth: -1.43%
• Country: US
• Employees: 2,396
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): -0.02
• Shares Outstanding: 22,635,277
• 10 Day Avg. Volume: 209,906
• 30 Day Avg. Volume: 171,843
• PEG Ratio: -3.19
• Price to Book (P/B): 0.87
• Price to Sales (P/S): 0.46
• P/FCF Ratio: 42.70
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 0.57
• Enterprise Value/Gross Profit: 4.95
• Enterprise Value/Ebitda: 6.55
• 1Y Price Target: $75.00
• Price Target Upside: 65.16% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): 3.32
• Revenue Forecast (FY): $2.47B

• Rating: 61 Neutral
• Price Target: $54.00 ▲(18.92% Upside)
• Action: Reiterated Date: 02/27/26
• Date: Action: Reiterated 02/27/26

SCL scores 61 mainly due to improving financial stability (lower leverage) and a 2025 free-cash-flow rebound, supported by earnings-call guidance tied to Project Catalyst savings and expected 2026 EBITDA growth. The score is held back by still-depressed profitability/returns and weak technicals (below short-term moving averages with oversold momentum), while valuation looks only moderately attractive given a high P/E despite a solid dividend yield.

Positive Factors

Improved leverage

A materially lower debt-to-equity (≈0.27) meaningfully improves financial flexibility and reduces interest-cost sensitivity. That stronger capital structure provides durable headroom to fund capex, absorb restructuring cash needs and support dividends during multi-quarter margin recovery.

Project Catalyst savings

Project Catalyst’s ~$100M pretax savings, with ~60% (~$60M) expected in 2026, is a structural cost and footprint optimization program. If executed, it should lower the company’s fixed-cost base, sustainably improve adjusted EBITDA margins and partially offset raw-material inflation over the coming 2–3 years.

Free cash flow recovery

Return to positive free cash flow and strong operating cash flow in 2025 signals improved cash conversion and working-capital management. Durable cash generation improves the company’s ability to fund capex, deleveraging and shareholder returns while financing Project Catalyst execution without relying solely on external funding.

Negative Factors

Compressed profitability

Stepan’s materially lower margins and mid-single-digit ROE indicate weakened earnings power versus prior cycles. Persistently compressed profitability limits reinvestment and cash-flow upside, heightens sensitivity to cost shocks and makes sustained return-on-capital improvement contingent on structural margin gains.

Raw-material exposure

Heavy exposure to oleochemical feedstocks and long inventory/supply-chain lags create structural margin volatility: pricing pass-through is imperfect and delayed. This makes sustainable margin recovery dependent on either improved raw-material markets or continued structural cost reductions from programs like Project Catalyst.

Weak commodity surfactants demand

Declining commodity-surfactant volumes and the Fieldsboro closure reflect structural softness in lower-margin detergent and commodity end markets. Reduced scale in these lines pressures plant utilization, limits pricing leverage and forces portfolio reshaping—potentially constraining near-term revenue and margin recovery.

Stepan Company Business Overview & Revenue Model

Company Description

Stepan Company, together with its subsidiaries, produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products. It operates through three segments: Surfactants, Polymers, and Specialty Products. The Surfactants segment offers surfactants that are used as principal ingredients in consumer and industrial cleaning products, including detergents for washing clothes, dishes, carpets, and floors and walls, as well as shampoos and body washes; and other applications, such as fabric softeners, germicidal quaternary compounds, disinfectants, and lubricating ingredients. Its surfactants are also used in various applications, including emulsifiers for spreading agricultural products; and industrial applications comprising latex systems, plastics, and composites. The Polymers segment provides polyurethane polyols that are used in the manufacture of rigid foam for thermal insulation in the construction industry, as well as a base raw material for coatings, adhesives, sealants, and elastomers (CASE); polyester resins, including liquid and powdered products, which are used in CASE applications; and phthalic anhydride that is used in unsaturated polyester resins, alkyd resins, and plasticizers for applications in construction materials, as well as components of automotive, boating, and other consumer products. The Specialty Products segment offers flavors, emulsifiers, and solubilizers for use in food, flavoring, nutritional supplement, and pharmaceutical applications. It serves in the United States, France, Poland, the United Kingdom, Brazil, Mexico, and internationally. Stepan Company was founded in 1932 and is headquartered in Northbrook, Illinois.

How the Company Makes Money

Stepan Company generates revenue primarily through the sale of its specialty and intermediate chemicals. Key revenue streams include the production and sale of surfactants, which are used in cleaning products, personal care items, and agricultural applications. The company also earns revenue from its polymers segment, which provides a variety of plastic additives and coatings. Additionally, Stepan's specialty products segment includes unique chemical formulations for various niche markets. Strategic partnerships with leading brands and manufacturers enhance its distribution capabilities and market reach, while ongoing investments in research and development enable the company to innovate and introduce new products, thereby driving further revenue growth.

Stepan Company Financial Statement Overview

Summary

Financials are improving but not yet strong: leverage is materially better (debt-to-equity ~0.27), and 2025 free cash flow rebounded to a solid positive after prior volatility. The key offset is compressed profitability and weak returns (net margin ~2% and ROE ~3.8% in 2025), with only modest revenue growth after earlier declines.

Income Statement

Revenue has rebounded in 2025 (up ~1.2% vs. 2024) after declines in 2023–2024, showing stabilization but not strong growth. Profitability has compressed materially versus 2020–2022: net margin is ~2.0% in 2025 vs. ~5–7% in 2020–2022, and operating profitability is similarly lower, indicating weaker pricing/power and/or cost pressure. While 2025 shows modest improvement in revenue and steady EBITDA margin versus 2024, overall earnings power remains well below prior-cycle levels.

Balance Sheet

Leverage improved significantly in 2025, with debt-to-equity dropping to ~0.27 from ~0.58 in 2023–2024, suggesting a stronger and less risky capital structure. Equity has remained solid and assets are stable, supporting balance-sheet resilience. The main weakness is subdued returns on equity (mid-single digits in 2023–2025, ~3.8% in 2025) versus much stronger levels in 2020–2022, implying that profitability—not balance-sheet capacity—is the current constraint.

Cash Flow

Cash generation is mixed. Operating cash flow has been consistently positive, and 2025 free cash flow improved sharply to a strong positive level after negative free cash flow in 2021–2023, signaling a meaningful recovery in cash discipline and/or working-capital/capex dynamics. However, free cash flow has been volatile across the period (including large outflows in 2021–2022), which reduces confidence in consistency, and cash flow strength still looks less steady than earlier peak years.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.33B	2.18B	2.33B	2.77B	2.35B
Gross Profit	269.89M	272.21M	277.60M	427.07M	395.81M
EBITDA	208.02M	192.10M	169.68M	294.24M	270.42M
Net Income	46.90M	50.37M	40.20M	147.15M	137.80M
Balance Sheet
Total Assets	2.36B	2.30B	2.36B	2.43B	2.07B
Cash, Cash Equivalents and Short-Term Investments	132.69M	99.67M	129.82M	173.75M	159.19M
Total Debt	691.04M	682.83M	712.17M	637.70M	420.25M
Total Liabilities	1.11B	1.13B	1.15B	1.27B	991.42M
Stockholders Equity	1.24B	1.17B	1.22B	1.17B	1.07B
Cash Flow
Free Cash Flow	25.37M	39.28M	-85.46M	-140.79M	-122.35M
Operating Cash Flow	147.88M	162.05M	174.88M	160.76M	72.14M
Investing Cash Flow	-89.05M	-116.94M	-258.67M	-308.09M	-376.83M
Financing Cash Flow	-35.44M	-64.52M	33.28M	166.21M	117.33M

Stepan Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 45.41
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCL, the sentiment is Negative. The current price of 45.41 is below the 20-day moving average (MA) of 59.09, below the 50-day MA of 54.33, and below the 200-day MA of 50.45, indicating a bearish trend. The MACD of -1.75 indicates Positive momentum. The RSI at 32.82 is Neutral, neither overbought nor oversold. The STOCH value of 7.33 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SCL.

Stepan Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
REX	78 Outperform	$1.19B	11.38	8.89%	―	-3.10%	-22.31%
IOSP	73 Outperform	$1.91B	16.33	-0.09%	2.19%	-4.49%	-100.80%
ODC	73 Outperform	$923.30M	11.58	20.62%	1.41%	5.29%	17.29%
MTX	63 Neutral	$2.20B	12.77	-1.07%	0.74%	-2.53%	-100.23%
ECVT	63 Neutral	$1.27B	-15.78	-4.15%	―	7.75%	-302.73%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
SCL	61 Neutral	$1.13B	23.10	3.67%	3.33%	5.35%	-1.43%

Stepan Company Corporate Events

Stepan Company Reports Q4 2025 Results, Declares Dividend

On February 23, 2026, Stepan Company reported fourth-quarter 2025 net income of $5.0 million, up 49% year over year, though adjusted net income swung to a $0.5 million loss as higher interest expense tied to the Pasadena, Texas start-up, a less favorable tax rate and weaker surfactant earnings weighed on results. EBITDA rose 21% to $43.3 million, but adjusted EBITDA slipped 3%, with global volumes down 3% in the quarter, while pre-tax earnings reflected a $6.2 million goodwill impairment in Mexico and $15.9 million of gains from divestitures in the Philippines and Lake Providence, Louisiana.

For full-year 2025, Stepan’s reported net income fell 7% to $46.9 million, while adjusted net income declined 17% to $41.7 million even as EBITDA and adjusted EBITDA rose 11% and 6%, respectively, on 1% global volume growth and 7% higher net sales driven by pricing and mix. Management framed 2025 as a “transformational” year marked by two plant divestitures, Pasadena start-up costs, continued margin recovery in surfactants despite raw material inflation, and stronger polymer volumes, while also highlighting $25.4 million in quarterly free cash flow, reduced net debt and a board decision on February 23, 2026, to declare a quarterly dividend of $0.395 per share payable March 13, 2026, to shareholders of record on March 2, 2026.

The most recent analyst rating on (SCL) stock is a Hold with a $63.00 price target. To see the full list of analyst forecasts on Stepan Company stock, see the SCL Stock Forecast page.

Stepan Launches Project Catalyst for Global Cost Efficiency

On February 20, 2026, Stepan Company’s board approved Project Catalyst, a two-year operational and efficiency program targeting about $100 million in pre-tax savings designed to optimize its global manufacturing footprint and support sustainable growth. Announced publicly on February 23, 2026, the initiative follows the 2025 sale of its Philippines and Lake Providence sites and underscores management’s focus on boosting shareholder returns amid inflationary pressures and softer demand in certain markets.

As part of Project Catalyst, Stepan will close its Fieldsboro, New Jersey site, citing continued lower demand for commodity surfactants used in laundry detergents, and will decommission select assets at its Elwood (Millsdale), Illinois and Stalybridge, U.K. facilities by mid-2026 while consolidating production into more efficient plants to maintain customer supply. The company expects 2026 restructuring charges of $70 million to $80 million, largely front-loaded into the first quarter, with cash impacts of $29 million to $44 million and non-cash impacts of $58 million to $62 million, reflecting substantial asset write-downs and decommissioning costs as it pursues a leaner, more cost-efficient operating base.

The most recent analyst rating on (SCL) stock is a Hold with a $63.00 price target. To see the full list of analyst forecasts on Stepan Company stock, see the SCL Stock Forecast page.

Stepan Company Approves Executive Severance Benefit Plan

On November 26, 2025, Stepan Company‘s Board of Directors approved the Key Executive Severance Benefit Plan, designed to provide severance compensation and benefits to selected employees, including named executive officers, in cases of certain involuntary terminations. The plan outlines severance payments, health insurance coverage, and conditions for equity awards, aiming to support executives during transitions while maintaining compliance with company policies and legal requirements.

The most recent analyst rating on (SCL) stock is a Hold with a $47.00 price target. To see the full list of analyst forecasts on Stepan Company stock, see the SCL Stock Forecast page.