NewMarket Corporation develops, manufactures, blends, and delivers chemical additives that enhance the performance of petroleum products. The company was founded in 1887 and is based in Richmond, Virginia.
NEU Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for NEU, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Newmarket Corp ranked in the 36th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. In terms of the factors that were most noteworthy in this DCF analysis for NEU, they are:
The company's balance sheet shows it gets 87% of its capital from equity, and 13% of its capital from debt. Its equity weight surpasses that of 71.84% of free cash flow generating stocks in the Basic Materials sector.
NEU's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than 26.86% of tickers in our DCF set.
Newmarket Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 12.88. This coverage rate is greater than that of 80.55% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
MTRN, ROCK, IFF, MTX, and IOSP can be thought of as valuation peers to NEU, in the sense that they are in the Basic Materials sector and have a similar price forecast based on DCF valuation.
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