A week ago, Stepan Company (NYSE:SCL) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 5.5% to hit US$593m. Stepan reported statutory earnings per share (EPS) US$0.86, which was a notable 13% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the consensus forecast from Stepan's three analysts is for revenues of US$2.36b in 2025. This reflects a reasonable 6.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 20% to US$3.00. In the lead-up to this report, the analysts had been modelling revenues of US$2.30b and earnings per share (EPS) of US$3.54 in 2025. While next year's revenue estimates increased, there was also a real cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
View our latest analysis for Stepan
The consensus price target fell 5.6% to US$85.00, suggesting that the analysts are primarily focused on earnings as the driver of value for this business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Stepan's past performance and to peers in the same industry. The analysts are definitely expecting Stepan's growth to accelerate, with the forecast 8.4% annualised growth to the end of 2025 ranking favourably alongside historical growth of 4.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.3% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Stepan to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on Stepan. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Stepan going out to 2027, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Stepan you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.