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Stepan Company (SCL) Company Bio

Stepan Chemical is a major manufacturer of specialty and intermediate chemicals used in a broad range of industries. Stepan is a leading merchant producer of surfactants, which are the key ingredients in consumer and industrial cleaning compounds. The Company is also a leading supplier of Polyurethane polyols used in the expanding thermal insulation market, and C.A.S.E. (Coatings, Adhesives, Sealants, and Elastomers) industries. The company was founded in 1932 and is based in Northfield, Illinois.

SCL Price Forecast Based on DCF Valuation

Below please find a table outlining a discounted cash flow forecast for SCL, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Stepan Co ranked in the 46st percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 22.5%. In terms of the factors that were most noteworthy in this DCF analysis for SCL, they are:

• SCL'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 42.16% of tickers in our DCF set.
• Stepan Co's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 19.48. This coverage rate is greater than that of 84.21% of stocks we're observing for the purpose of forecasting via discounted cash flows.
• Relative to other stocks in its sector (Basic Materials), Stepan Co has a reliance on debt greater than only 19.27% of them.

For other companies in the Basic Materials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as SCL, try EXP, WOR, SXC, BHP, and NP.