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Stepan Co. (SCL) Soars to 52-Week High, Time to Cash Out?
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Shares of Stepan (SCL - Free Report) have been strong performers lately, with the stock up 3.3% over the past month. The stock hit a new 52-week high of $134.98 in the previous session. Stepan has gained 12.2% since the start of the year compared to the 19.8% move for the Zacks Basic Materials sector and the 12.9% return for the Zacks Chemical - Diversified industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 27, 2021, Stepan Co. reported EPS of $1.82 versus consensus estimate of $1.43 while it beat the consensus revenue estimate by 8.45%.
For the current fiscal year, Stepan Co. is expected to post earnings of $6.74 per share on $2.14 billion in revenues. This represents a 18.66% change in EPS on a 14.46% change in revenues. For the next fiscal year, the company is expected to earn $7.32 per share on $2.22 billion in revenues. This represents a year-over-year change of 8.64% and 3.89%, respectively.
Valuation Metrics
Stepan Co. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Stepan Co. has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 19.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.1X versus its peer group's average of 11.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Stepan Co. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Stepan Co. meets the list of requirements. Thus, it seems as though Stepan Co. shares could have a bit more room to run in the near term.
How Does Stepan Co. Stack Up to the Competition?
Shares of Stepan Co. have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Cabot (CBT - Free Report) , Dow (DOW - Free Report) , and Johnson Matthey (JMPLY - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Stepan Co.even beyond its own solid fundamental situation.
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Stepan Co. (SCL) Soars to 52-Week High, Time to Cash Out?
Shares of Stepan (SCL - Free Report) have been strong performers lately, with the stock up 3.3% over the past month. The stock hit a new 52-week high of $134.98 in the previous session. Stepan has gained 12.2% since the start of the year compared to the 19.8% move for the Zacks Basic Materials sector and the 12.9% return for the Zacks Chemical - Diversified industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 27, 2021, Stepan Co. reported EPS of $1.82 versus consensus estimate of $1.43 while it beat the consensus revenue estimate by 8.45%.
For the current fiscal year, Stepan Co. is expected to post earnings of $6.74 per share on $2.14 billion in revenues. This represents a 18.66% change in EPS on a 14.46% change in revenues. For the next fiscal year, the company is expected to earn $7.32 per share on $2.22 billion in revenues. This represents a year-over-year change of 8.64% and 3.89%, respectively.
Valuation Metrics
Stepan Co. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Stepan Co. has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 19.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.1X versus its peer group's average of 11.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Stepan Co. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Stepan Co. meets the list of requirements. Thus, it seems as though Stepan Co. shares could have a bit more room to run in the near term.
How Does Stepan Co. Stack Up to the Competition?
Shares of Stepan Co. have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Cabot (CBT - Free Report) , Dow (DOW - Free Report) , and Johnson Matthey (JMPLY - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Stepan Co.even beyond its own solid fundamental situation.