Stepan Company (SCL) AI Stock Analysis

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Stepan Company

(NYSE:SCL)

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Rating:61Neutral

Price Target:$75.00▲(10.54% Upside)

Action:reiterated

Date:11/05/26

SCL scores as neutral-to-moderately attractive: strong technical momentum and a notably positive earnings call with cost-savings execution and improved leverage support the outlook. Offsetting this, current financial performance is still weak (very low TTM margins and negative/volatile free cash flow) and valuation is a major headwind due to the extremely elevated P/E, leaving the overall risk/reward balanced rather than compelling.

Positive Factors

Broad-Based Volume GrowthGrowth across all three segments indicates improving demand is broad rather than dependent on one product line. Sustained volume expansion can improve plant utilization, support operating leverage, and strengthen customer relationships across consumer, construction, industrial, and specialty markets.

Negative Factors

Severe Profitability CompressionVery low margins show that modest revenue growth is currently translating into limited earnings power. Persistent cost or mix pressure could constrain reinvestment, reduce resilience during weaker demand, and make the recovery dependent on successful pricing, productivity, and utilization improvements.

Stepan Company (SCL) vs. SPDR S&P 500 ETF (SPY)

Market Cap: $1.54B
Dividend Yield: 2.33%
Average Volume (3M): 145.29K
Price to Earnings (P/E): 357.1
Beta (1Y): 0.95
Revenue Growth: 10.02%
EPS Growth: -90.50%
Country: US
Employees: 2,328
Sector: Basic Materials
Sector Strength: 61
Industry: Chemicals - Specialty

Stepan Company Business Overview & Revenue Model

Company Description

Stepan Company, together with its subsidiaries, produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products in the United States, France, Poland, the United Kingdom, Brazil, Mexico, and international...

How the Company Makes Money

Stepan makes money primarily by manufacturing chemical products and selling them to customers under negotiated supply agreements and purchase orders, generating revenue largely based on shipped volumes and contract/market-based pricing for each produ...

Stepan Company Earnings Call Summary

Earnings Call Date:Oct 27, 2026(Q3-2026)|% Change Since:4.05%|Next Earnings Date:Feb 17, 2027

Earnings Call SentimentPositive

The call was strongly positive overall. Highlights significantly outweighed the challenges, with broad-based volume and earnings growth, higher margins, savings ahead of plan, improved leverage, positive free cash flow, customer expansion, and a positive full-year outlook. The main negatives were raw material and geopolitical volatility, working capital usage, restructuring and maintenance costs, weaker European and Asian demand, lower crop productivity demand, and expected moderation in fourth-quarter volume growth.

Positive Updates

Broad-Based Earnings Growth

All three segments delivered organic volume growth and increased earnings versus the prior year. Adjusted EBITDA was $66.3 million, up $10.1 million or 18%, while adjusted net income was $21.7 million, or $0.94 per diluted share, up 98% from $10.9 million or $0.48 per diluted share.

Negative Updates

Raw Material and Geopolitical Volatility

Raw material costs continued to increase in a volatile environment, with additional volatility in fixed costs and supply chains related to the Middle East conflict. Management said some pricing adjustments were still being made and that future results would depend on raw material prices.

Company Guidance

For 2026, Stepan expects to exceed the 60% 2-year $100 million pretax savings target, with Project Catalyst savings in the $66 million to $70 million range, versus a $23 million run rate in Q3; for 2027, it expects to be ahead of $25 million on average, with savings ahead of $25 million in the second half and slightly below $25 million in the first half. The company expects lower growth in Q4, and its fixed cost base is roughly $800 million, with normal inflation of 2%-3% on that base. Pasadena utilization is in the 75%-80% range, with more tolling savings expected in the second half than the first half of next year. For 2026, the company expects full year adjusted EBITDA growth, positive free cash flow, and continued deleveraging of the balance sheet.

Stepan Company Financial Statement Overview

Summary

Financials are mixed. Income statement weakness is the key drag (TTM net margin ~0.2% and EBIT margin ~1.3% despite ~4.2% revenue growth), indicating significant profitability compression. The balance sheet is comparatively steady with manageable leverage (debt-to-equity ~0.52), but returns have fallen near zero (ROE ~0.4%). Cash flow adds risk: operating cash flow is positive (~$132M) but TTM free cash flow is negative (~-$66M) and volatile, with weak cash conversion versus EBIT.

Income Statement

44Neutral

Balance Sheet

63Positive

Cash Flow

38Negative

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.53B	2.33B	2.18B	2.33B	2.77B	2.35B
Gross Profit	303.93M	269.89M	272.21M	277.60M	427.07M	395.81M
EBITDA	160.91M	212.17M	192.10M	169.68M	294.24M	270.42M
Net Income	4.32M	46.90M	50.37M	40.20M	147.15M	137.80M
Balance Sheet
Total Assets	2.39B	2.36B	2.30B	2.36B	2.43B	2.07B
Cash, Cash Equivalents and Short-Term Investments	98.10M	132.69M	99.67M	129.82M	173.75M	159.19M
Total Debt	634.10M	691.04M	682.83M	712.17M	637.70M	420.25M
Total Liabilities	1.17B	1.11B	1.13B	1.15B	1.27B	991.42M
Stockholders Equity	1.22B	1.24B	1.17B	1.22B	1.17B	1.07B
Cash Flow
Free Cash Flow	-65.87M	25.37M	39.28M	-85.46M	-140.79M	-122.35M
Operating Cash Flow	131.56M	147.88M	162.05M	174.88M	160.76M	72.14M
Investing Cash Flow	-98.41M	-89.05M	-116.94M	-258.67M	-308.09M	-376.83M
Financing Cash Flow	-46.87M	-35.44M	-64.52M	33.28M	166.21M	117.33M

Stepan Company Technical Analysis

Technical Analysis SentimentPositive

Last Price67.85

Price Trends

50DMA63.51Positive

100DMA61.40Positive

200DMA56.73Positive

Market Momentum

MACD1.89Negative

RSI58.47Neutral

STOCH59.80Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SCL, the sentiment is Positive. The current price of 67.85 is above the 20-day moving average (MA) of 65.15, above the 50-day MA of 63.51, and above the 200-day MA of 56.73, indicating a bullish trend. The MACD of 1.89 indicates Negative momentum. The RSI at 58.47 is Neutral, neither overbought nor oversold. The STOCH value of 59.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SCL.

Stepan Company Risk Analysis

Stepan Company disclosed 21 risk factors in its most recent earnings report. Stepan Company reported the most risks in the "Production" category.

Production - Risks related to the company’s ability to manufacture goods and services

Latest Risks Added

0 New Risks

Stepan Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

SCL against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IOSP	72Outperform	$1.99B	13.93	10.42%	2.26%	4.73%	―
FUL	68Neutral	$2.83B	13.80	9.51%	1.93%	1.48%	72.33%
ESI	62Neutral	$8.11B	36.39	7.39%	1.04%	39.62%	-14.83%
Sector *	61Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
ASH	61Neutral	$3.50B	847.55	0.21%	2.19%	2.08%	―
SCL	61Neutral	$1.61B	357.11	0.36%	2.33%	10.02%	-90.50%
KWR	60Neutral	$2.70B	27.14	7.02%	1.35%	8.68%	―

* Basic Materials Sector Average

Performance Comparison

SCL and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
SCL	Stepan Company	67.85	25.83	61.46%
ASH	Ashland Global Holdings, Inc.	76.28	27.59	56.67%
FUL	H.B. Fuller Company	50.22	-6.68	-11.74%
IOSP	Innospec	79.13	3.59	4.75%
KWR	Quaker Chemical	152.54	16.55	12.17%
ESI	Element Solutions	30.76	3.36	12.27%

Stepan Company Corporate Events

Business Operations and StrategyDividendsFinancial Disclosures

Stepan Company Reports Strong Q3 Results Amid Restructuring

Positive

Oct 28, 2026

On October 28, 2026, Stepan reported a sharp improvement in third-quarter results, with net income rising 64% to $17.8 million and adjusted net income nearly doubling to $21.7 million as net sales climbed 17% on higher prices and stronger volumes. Ad...

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Nov 05, 2026

Stepan Company AI Stock Analysis