Is It Too Late To Consider Buying Stepan Company (NYSE:SCL)?
Stepan Company (NYSE:SCL), might not be a large cap stock, but it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Stepan’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for Stepan
What is Stepan worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17.79% above my intrinsic value, which means if you buy Stepan today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $94.20, there’s only an insignificant downside when the price falls to its real value.
What does the future of Stepan look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Stepan, it is expected to deliver a relatively unexciting top-line growth of 4.3% over the next year, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SCL’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on SCL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Stepan, you'd also look into what risks it is currently facing. For example - Stepan has 1 warning sign we think you should be aware of.
If you are no longer interested in Stepan, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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