Stepan Company (SCL)
Valuation Overview•Is Stepan Company Overvalued or Undervalued?
The market is pricing the stock in line with historical averages, assuming steady-state growth.
Fragile underlying quality score of 28/100; weak margins or elevated debt leverage warrant caution.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Mixed fundamental profile with offsetting strengths and weaknesses.
Wall Street is highly bullish, projecting significant upside alongside robust expected earnings growth. This is paired with healthy capital returns, anchored by a strong dividend yield, though free cash flow coverage appears tight.
SCL struggles with subpar profitability and pressured margins. However, the balance sheet carries elevated leverage, requiring careful monitoring of debt servicing capabilities.
The company is facing top-line contraction (-5.6% 3Y CAGR) however, earnings have severely contracted over the same period. However, profitability remains a major concern with severely compressed operating margins (2.4%).
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $604.5M | +7.0% | -5.6% | +4.5% | +2.8% | |
| EBITDA | $48.8M | — | -13.5% | — | — | |
| Net Income | -$41.4M | -6.9% | -31.7% | — | -4.7% | |
| EPS (Diluted) | $-1.81 | -6.8% | -31.5% | -17.8% | -4.7% | |
| Free Cash Flow | -$14.0M | -35.4% | — | -25.3% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 11.1% | 12.0% | 13.7% | 16.1% |
| Operating Margin | 2.4% | 2.9% | 4.7% | 6.2% |
| Net Margin | -0.6% | 2.0% | 3.4% | 4.5% |
| FCF Margin | -0.8% | -0.3% | -2.2% | 1.8% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $0.39 | $0.45 | +16.9% | ||
| Q1'26 | $0.35 | $-0.02 | -105.7% | ||
| Q4'25 | $0.36 | $0.48 | +33.3% | ||
| Q3'25 | $0.92 | $0.52 | -43.5% | ||
| Q2'25 | $0.51 | $0.84 | +64.7% | ||
| Q1'25 | $0.45 | $0.12 | -73.3% | ||
| Q4'24 | $0.65 | $1.03 | +58.5% | ||
| Q3'24 | $0.67 | $0.41 | -38.8% |
Total return is +2.6% (1Y), lagging the benchmark by -18.3%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +18.4% | +11.1% | — |
| 1Y | +2.6% | -18.3% | +2.8% |
| 3YCAGR | -13.7% | -34.0% | +5.0% |
| 5YCAGR | -12.8% | -24.9% | +5.9% |
| 10YCAGR | +1.5% | -13.1% | — |
The S&P 500 is at 30.6x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Stepan Company (SCL) valuation, health, and returns.
Stepan Company is estimated to be fairly valued under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. trading near fair value (DCF: $0.00)
Stepan Company has multiple valuation anchors: DCF Intrinsic Value: $0.00 | Peer Relative Fair Value: $56.54 | Wall Street Analyst Target: $75.00 (implying +34.6% upside). A convergence of these signals offers higher conviction.
Stepan Company displays weak financial health with a composite quality score of 28/100, supported by a Altman Z-Score of 2.4 (grey zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 2.9%.
Stepan Company pays a 2.7% dividend yield, covered by a 75% payout ratio with 41 years of growth, supplemented by a 0.0% buyback yield.
Stepan Company's current growth trajectory is Accelerating. The company achieved +7.0% 1Y revenue growth and -6.8% 1Y EPS growth, compared to its 3Y revenue CAGR of -5.6%.
Wall Street consensus is Buy based on 3 analysts, beating EPS expectations in 42% of recent quarters with a 1-quarter streak. The consensus price target represents a +34.6% change from current levels.
Investment risks for Stepan Company include: -33.3% 1-year max drawdown. Volatility risk is characterized by a beta of 0.92x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.