Stepan Company

Stepan Company (SCL) is a solid Growth and Income pick that has also seen strong momentum lately. The stock has more than doubled the performance of the broader market over the past 3 months as analysts upped full-year earnings estimates by 36.5% to $2.77 per share.

Company Description

Stepan Company manufactures specialty and intermediate chemicals used in consumer products and industrial application. The company produces surfactants, which are the key ingredients in consumer and industrial cleaning compounds.

The company explains that manufacturers of detergents, shampoos, lotions, toothpastes and cosmetics depend on surfactants to achieve the foaming and cleaning qualities of their products.

Stepan also makes lubricating ingredients and emulsifiers for spreading of agricultural products. The company produces germicidal quaternary compounds as well.

Stepan produces other specialty products, including custom-made flavors, emulsifiers and solubilizers, which are used in the food and pharmaceutical industries. The company’s other products are used by the construction and refrigeration industries.

Stepan is headquartered in Northfield, Illinois and utilizes a network of modern production facilities located in North and South America, Europe and Asia.

Strong Technicals and Fundamentals

Stepan is a solid Growth and Income pick that has also seen strong momentum lately. The stock has more than doubled the performance of the broader market over the past 3 months.

Analysts have been raising estimates during that time, upping full-year earnings estimates by 36.5% to $2.77 per share over the past 3 months.

For 2010, analysts have earnings pegged at $3.30 per share, versus the 3-months ago level of $2.71.

During the past 4 consecutive quarters, SCL’s earnings have, on average, come in 18% ahead of analysts’ expectations.

Stepan’s return on equity (ROE) of 14% tops the industry average of 12%. The Growth and Income play also pays a dividend, yielding 2.1%. The averaging industry yield stands at a lower 0.7% .

The company saw a solid first quarter, delivering earnings per share of $1.13, surpassing last year’s 85 cents and eclipsing the consensus estimate by 53%.

Second-quarter results are scheduled for release on July 28.

Read the full analyst report on SCL