Is SCL the solution for your portfolio?
Stepan Company (NYSE:SCL) is a major manufacturer of specialty and intermediate chemicals used in a broad range of industries. SCL is a producer of surfactants, which are the key ingredients in consumer and industrial cleaning and disinfection products and in agricultural and oilfield solutions. Stepan is also a supplier of polyurethane polyols used in the expanding thermal insulation market, and the coatings, adhesives, sealants, and elastomers industries.
SCL is scheduled to issue its first quarter of 2022 financial results on Tuesday, April 26. The chemical manufacturer's senior leadership team will also hold a conference call to discuss and answer questions about their financial and operational performance on the same day. Most recently, Stepan reported earnings of $0.97 per share for the fourth quarter of 2021. Analysts anticipate that Stepan's EPS (earnings per share) will come in at an solidly increased $1.32 for the upcoming Q1 earnings report.
Stepan stock has dropped about 26% in price year-over-year and SCL is currently trading down 30% since reaching its all-time high of $139.30 last May. Additionally, shares of SCL have dropped in price 21% year-to-date and Stepan stock is currently up just 3% from their 52-week low of $95.78 just reached in mid-March. Moreover, Stepan Company offers a dividend yield of 1.3% with a forward dividend of $1.28.
From a fundamental point of view, Stepan stock has a fair valuation at a forward price-earnings ratio of 15.31 and a price-sales ratio of 0.99, providing somewhat of a limited growth rate. Although SCL grew revenues and net income 25% and 9%, respectively, for fiscal 2021, the chemicals manufacturer had previously demonstrated slow growth. SCL even reported a 7% decrease in revenues and a 9% decline in net income for fiscal 2019.
Still, Stepan Company is estimated to grow revenues 7.3% and earnings 7.5% for fiscal 2022. SCL is also estimated to increase their earnings by 13.5% for fiscal 2023, but are expected to increase revenues by just 2%. Overall, Stepan stock is likely best suited for value investors looking for long-term appreciation and dividend profits.