Stepan (NYSE: SCL) is one of 52 public companies in the “Specialty Chemicals” industry, but how does it contrast to its competitors? We will compare Stepan to related companies based on the strength of its valuation, risk, analyst recommendations, dividends, institutional ownership, profitability and earnings.

Insider & Institutional Ownership

62.5% of Stepan shares are owned by institutional investors. Comparatively, 69.9% of shares of all “Specialty Chemicals” companies are owned by institutional investors. 13.1% of Stepan shares are owned by company insiders. Comparatively, 7.1% of shares of all “Specialty Chemicals” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Stepan and its competitors top-line revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Stepan $1.83 billion $207.56 million 21.96
Stepan Competitors $1.96 billion $302.06 million 15.93

Stepan’s competitors have higher revenue and earnings than Stepan. Stepan is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Risk and Volatility

Stepan has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500. Comparatively, Stepan’s competitors have a beta of 1.59, suggesting that their average stock price is 59% more volatile than the S&P 500.

Profitability

This table compares Stepan and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stepan 4.85% 14.95% 7.28%
Stepan Competitors -2.47% 8.99% 4.06%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Stepan and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stepan 0 3 1 1 2.60
Stepan Competitors 255 1218 1336 34 2.40

Stepan presently has a consensus price target of $34.25, indicating a potential downside of 59.06%. As a group, “Specialty Chemicals” companies have a potential downside of 1.29%. Given Stepan’s competitors higher probable upside, analysts clearly believe Stepan has less favorable growth aspects than its competitors.

Dividends

Stepan pays an annual dividend of $0.82 per share and has a dividend yield of 1.0%. Stepan pays out 21.5% of its earnings in the form of a dividend. As a group, “Specialty Chemicals” companies pay a dividend yield of 1.4% and pay out 27.3% of their earnings in the form of a dividend. Stepan has increased its dividend for 49 consecutive years.

Summary

Stepan beats its competitors on 8 of the 15 factors compared.

Stepan Company Profile

Stepan Company produces specialty and intermediate chemicals, which are sold to other manufacturers and used in a range of end products. The Company operates through three segments: Surfactants, Polymers and Specialty Products. The Company’s principal markets include manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products and plastics. Its Surfactants segment offers products, which are principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Its Polymers segment includes polyurethane polyols, polyester resins and phthalic anhydride. Its Specialty Products segment includes flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications.

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