Stepan Company Common Stock (SCL)

FairStock Score: 53/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

As a value investor, I start with the business: Stepan sells specialty and intermediate chemicals—surfactants, polymers, specialty products—to other manufacturers. That can be a decent franchise, but it is cyclical and capital-intensive, and the numbers show limited pricing power. In fiscal Q2 2026, the quarter ended 2026-06-30, revenue was $684.1 million, net income $22.9 million, and diluted EPS $1.00, up from fiscal Q2 2025 revenue of $594.7 million, net income $11.3 million, and EPS $0.50. Yet fiscal Q1 2026, ended 2026-03-31, produced a $41.4 million net loss and EPS of -$1.81. That swing explains the trailing EPS of -$0.12 and the negative P/E of -516.75, a FairStock calculation at the $62.01 close on 2026-10-13. Full-year FY2025 net income was $46.9 million on $2.3 billion of revenue, below FY2024's $50.4 million and only modestly above FY2023's $40.2 million. FairStock's revenue growth of 5.38% and profit growth of 49.37% are encouraging, but the base is volatile. Profitability is thin: FairStock's ROE is -0.22%, ROCE 2.09%, and the latest quarter's margin was 3.35%. The balance sheet has D/E of 0.58, Altman Z of 1.86, and Piotroski 6/9—not distressed, but not fortress-like. Valuation is not demanding: P/B 1.16, EV/EBITDA 8.75, dividend yield 2.55%, FCF yield 2.6%. Still, with $36.6 million of trailing FCF and cyclical earnings, I need a clearer sign that Q2's improvement is durable before calling it a bargain.

In plain English: Stepan makes specialty chemicals, including ingredients used in cleaning products and other manufacturers' goods. The business looks mixed: sales are growing and the latest quarter was profitable, but full-year earnings have been small and one recent quarter had a big loss. At $62.01 a share, the price looks about fair compared with what the company owns and the cash it produces, though the weak profit record makes it hard to call a clear bargain.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer