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Stepan Company (SCL)
NYSE:SCL
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Stepan Company
(NYSE:SCL)
Rating:67Neutral
Price Target:
$54.00
▲(7.94% Upside)
Stepan Company (SCL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.13B
Dividend Yield3.07%
Average Volume (3M)169.88K
Price to Earnings (P/E)19.8
Beta (1Y)1.10
Revenue Growth2.64%
EPS Growth66.43%
CountryUS
Employees2,396
SectorBasic Materials
Sector Strength66
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)0.52
Shares Outstanding22,616,440
10 Day Avg. Volume259,494
30 Day Avg. Volume169,880
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.66
Enterprise Value/Revenue0.83
Enterprise Value/Gross Profit6.73
Enterprise Value/Ebitda9.71
Forecast
1Y Price Target
$54.00Price Target Upside7.94% Upside
Rating ConsensusHold
Number of Analyst Covering0
Stepan Company Business Overview & Revenue Model
Company DescriptionStepan Company (SCL) is a global manufacturer of specialty and intermediate chemicals. Founded in 1932 and headquartered in Northfield, Illinois, Stepan operates across several sectors, including surfactants, polymers, and specialty products. The company's core products are used in a variety of applications such as personal care, cleaning products, food and agriculture, and plastics. Stepan's commitment to sustainability and innovation drives its development of products that meet the evolving needs of its global customer base.
How the Company Makes MoneyStepan Company generates revenue primarily through the production and sale of specialty chemicals, which are utilized across various industries. The company has several key revenue streams, including surfactants for home and personal care products, agricultural products, and polyurethane systems. Additionally, Stepan benefits from strategic partnerships with leading companies in the consumer goods and agricultural sectors, which enhance its market reach and product offerings. Factors contributing to its earnings include a strong focus on research and development, a diversified product portfolio, and a commitment to sustainability, allowing Stepan to meet customer demands while maintaining competitive pricing.
Stepan Company Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 15, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed performance with robust growth in adjusted net income and EBITDA, supported by strong results in the Polymers and Crop Productivity sectors. However, the company faced margin pressures due to raw material costs, negative free cash flow, and costs related to environmental and regulatory issues. Despite these challenges, there is optimism about future growth driven by production ramp-up at the new facility and strategic market expansions.Q2-2025 Updates
Positive Updates
Adjusted EBITDA Growth
The company reported second quarter adjusted EBITDA of $51.4 million, up 8% versus the prior year. Polymers delivered double-digit adjusted EBITDA growth.
Net Income Increase
The company finished the second quarter of 2025 with $12 million of adjusted net income, up 27% versus the prior year, driven by earnings growth in polymers and crop productivity as well as a lower tax rate.
Production Expansion
Production at the new Pasadena, Texas site is ramping up and should provide incremental benefits in the second half of the year. Specialty alkoxylation volumes continue to grow strong double digits in the second quarter.
Dividend Payments
During the second quarter of 2025, the company paid $8.7 million in dividends to shareholders. The company has increased its dividend for 57 consecutive years.
Surfactant Selling Price Increase
Surfactant net sales were $411.5 million for the quarter, an 8% increase versus prior year. Selling prices were up 11%, primarily due to improved product and customer mix.
Negative Updates
Surfactant Margin Pressure
Significantly higher oleochemical raw material costs continue to impact Surfactant margins. Surfactant adjusted EBITDA decreased $0.5 million or 1% versus the prior year.
Negative Free Cash Flow
Free cash flow was negative at $14.4 million for the second quarter, down $14.2 million year-over-year, reflecting higher working capital requirements and increased purchases of raw materials.
Environmental and Regulatory Costs
Earnings growth was impacted by higher start-up expenses at the Pasadena, Texas facility, an environmental remediation reserve adjustment at the Millsdale site, and an EPA penalty.
Specialty Products EBITDA Decline
Specialty Products adjusted EBITDA decreased $2.1 million or 24%, primarily due to order timing fluctuations within the Pharmaceutical business.
China Polymers Volume Decline
China Polymers volume was down low double digits, reflecting challenging market conditions.
Company Guidance
During the Stepan Company's Second Quarter 2025 Earnings Conference Call, several key financial metrics and strategic updates were discussed. The company reported an adjusted EBITDA of $51.4 million, reflecting an 8% increase from the previous year, driven primarily by double-digit growth in the Polymers segment, although Surfactants experienced a slight decline due to high oleochemical raw material costs. Adjusted net income rose by 27% to $12 million, with improvements attributed to earnings growth in Polymers and Crop Productivity segments, alongside a lower effective tax rate of 19.2%, down from the usual 24-26%. Despite these gains, free cash flow was negative at $14.4 million due to inventory builds and start-up expenses at the new Pasadena facility. The company also announced a $0.385 per share quarterly dividend, marking the 57th consecutive year of dividend increases. Looking ahead, Stepan aims to recover Surfacent margins and anticipates additional benefits from the Pasadena site ramp-up and strategic asset optimizations, including the planned sale of their Philippines site by the fourth quarter of 2025.Stepan Company Financial Statement Overview
Summary
The company shows stable revenue and operational efficiency with a solid balance sheet characterized by conservative leverage. Profitability margins suggest room for improvement, but strong cash flow performance indicates robust operational cash generation.Income Statement
The company shows a stable revenue base with a slight TTM revenue increase of 1.9% compared to the previous annual period. Gross profit margin for TTM is 12.5%, reflecting consistent operational efficiency, though slightly lower than historical figures. Net profit margin for TTM is 2.53%, indicating room for improvement in profitability. EBIT and EBITDA margins at 3.54% and 8.62% respectively, suggest moderate operational efficiency typical for the industry.75
Positive
Balance Sheet
The balance sheet reflects a stable financial structure with a debt-to-equity ratio of 0.55, which is relatively conservative and indicative of manageable leverage. The equity ratio stands at 50.2%, showcasing a solid equity base. Return on equity for TTM is 4.68%, which, although positive, suggests potential for enhancing shareholder returns.70
Positive
Cash Flow
The company's cash flow shows a favorable operating cash flow to net income ratio of 2.15 for TTM, highlighting strong cash generation relative to earnings. Free cash flow has improved significantly in the latest period, although historical volatility in free cash flow to net income ratio indicates potential cash flow management challenges.68
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.26B | 2.18B | 2.33B | 2.77B | 2.35B | 1.87B |
| Gross Profit | 279.73M | 272.21M | 277.60M | 427.07M | 395.81M | 383.61M |
| EBITDA | 193.81M | 192.10M | 169.68M | 294.24M | 270.42M | 260.51M |
| Net Income | 58.01M | 50.37M | 40.20M | 147.15M | 137.80M | 126.77M |
Balance Sheet | ||||||
| Total Assets | 2.42B | 2.30B | 2.36B | 2.43B | 2.07B | 1.75B |
| Cash, Cash Equivalents and Short-Term Investments | 88.90M | 99.67M | 129.82M | 173.75M | 159.19M | 349.94M |
| Total Debt | 383.24M | 682.83M | 712.17M | 637.70M | 420.25M | 250.24M |
| Total Liabilities | 1.17B | 1.13B | 1.15B | 1.27B | 991.42M | 763.97M |
| Stockholders Equity | 1.24B | 1.17B | 1.22B | 1.17B | 1.07B | 986.69M |
Cash Flow | ||||||
| Free Cash Flow | 74.45M | 39.28M | -85.46M | -140.79M | -122.35M | 109.42M |
| Operating Cash Flow | 109.13M | 162.05M | 174.88M | 160.76M | 72.14M | 235.22M |
| Investing Cash Flow | -114.38M | -116.94M | -258.67M | -308.09M | -376.83M | -139.03M |
| Financing Cash Flow | -35.26M | -64.52M | 33.28M | 166.21M | 117.33M | -64.93M |
Stepan Company Technical Analysis
Neutral
50.03
Price Trends
52.83
Negative
52.81
Negative
57.46
Negative
Market Momentum
-0.65
Negative
47.61
Neutral
45.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCL, the sentiment is Neutral. The current price of 50.03 is above the 20-day moving average (MA) of 49.68, below the 50-day MA of 52.83, and below the 200-day MA of 57.46, indicating a neutral trend. The MACD of -0.65 indicates Negative momentum. The RSI at 47.61 is Neutral, neither overbought nor oversold. The STOCH value of 45.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SCL.
Stepan Company Risk Analysis
Stepan Company disclosed 20 risk factors in its most recent earnings report. Stepan Company 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
Stepan Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.13B | 19.80 | 4.77% | 3.07% | 2.64% | 66.43% | |
63 Neutral | $3.28B | 52.66 | 7.06% | ― | 56.87% | ― | |
63 Neutral | $2.13B | 113.69 | 1.55% | 1.90% | -5.45% | -87.13% | |
61 Neutral | $10.37B | 6.45 | -0.08% | 2.84% | 3.09% | -36.03% | |
61 Neutral | $2.18B | ― | -106.83% | ― | -14.45% | 49.92% | |
55 Neutral | $2.90B | 41.89 | -0.69% | 3.20% | 1.49% | -105.20% | |
51 Neutral | $2.34B | 59.33 | -87.50% | 4.15% | 2.48% | -459.90% |
* Basic Materials Sector Average
Performance Comparison
SCL
Stepan Company
50.03
-20.05
-28.61%
IOSP
Innospec
85.20
-19.13
-18.34%
OLN
Olin
25.03
-14.14
-36.10%
CC
Chemours Company
16.25
0.17
1.06%
NGVT
Ingevity
60.74
27.83
84.56%
PRM
Perimeter Solutions
22.98
11.85
106.47%
Stepan Company Corporate Events
DividendsFinancial Disclosures
Stepan Company Announces Quarterly Cash Dividend
Positive
Jul 30, 2025
On July 30, 2025, Stepan Company announced a quarterly cash dividend of $0.385 per share, payable on September 15, 2025. The company reported a 19% increase in net income for the second quarter of 2025, driven by growth in its Polymers and Crop Productivity businesses, despite challenges such as start-up costs and environmental reserve adjustments. The company also highlighted a 7% increase in net sales, attributed to higher selling prices and favorable product mix, while facing a negative free cash flow due to increased working capital needs.
Executive/Board Changes
Stepan Company Appoints New CFO Ruben Velasquez
Neutral
Jul 14, 2025
On July 14, 2025, Stepan Company announced the appointment of Ruben Velasquez as Vice President and Chief Financial Officer, effective July 15, 2025. Velasquez, who brings over two decades of global finance leadership experience, previously held senior finance roles at 3M Company and Ecopetrol. His appointment is expected to bolster Stepan’s financial leadership, as he succeeds Samuel Hinrichsen, who will continue as Vice President of Finance.
Executive/Board Changes
Stepan Company Appoints Corning Painter as Director
Neutral
Jun 9, 2025
On June 9, 2025, Stepan Company announced the appointment of Corning Painter as a Director, expanding the Board to eight members. Painter, who is the CEO of Orion S.A. and has extensive experience in the chemical industry, will also join several key committees, bringing strategic and operational expertise to the company.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.