Despite declining earnings, Stepan's growing dividends are due to a larger payout of profits. With 83% of profits already paid out and shrinking earnings, future dividend growth seems unlikely. The company doesn't seem to be an excellent dividend investment opportunity.
F. Quinn Stepan, Jr., Chairman of Stepan, welcomes Susan's expertise to the Board, particularly her extensive supply chain experience in the chemical manufacturing industry and understanding of the agricultural industry, a key market for Stepan.
Despite Stepan's stock rise, its inconsistent financials and low ROE may impact share price momentum. Low earnings growth despite high profit retention suggests investors may not benefit from reinvestment. Future payout ratio is expected to rise to 33%, indicating a potential strategy shift.
High levels of insider ownership at Stepan are seen positively. However, the selling of shares by insiders over the past year does not instill confidence.
Despite the dim EPS, Stepan's upwardly revenue trend shows the possibility of exchange between current earnings for growth. The market seems detached from earnings growth as reflected by the EPS and share price disparity. Recent market downturn could offer an investment window for long-term growth investors.
The trend of shrinking returns, despite reinvestment in the business, is not seen as a typical characteristic of multi-baggers. Observers suggest that potential investors may need to look elsewhere if they're seeking multi-bagger returns.
Insider sales at Stepan Company, with no purchases, may be a red flag for investors. The continued sale may suggest insiders think shares are not cheap, leading to caution among potential buyers.
$Stepan (SCL.US)$Over the past 5 years, revenue declined only 6.8% in 2019, and increased in the remaining 4 years. Operating profit fell 16% in 2019, the 5-year average growth rate was 7%, 2022 surged 19.4%, net profit fell 8.6% in 2019, and increased by 6.7% in the remaining 4 years, with an average growth rate of 9.9% for 5 years and an increase of 6.7% in 2022. Currently, the price-earnings ratio is 16.7. The valuation is within a reasonable range, which is not very attractive.
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Currently, the price-earnings ratio is 16.7. The valuation is within a reasonable range, which is not very attractive.
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