Stepan Insider Trades Send A Signal

It was reported on March 12, that F. Quinn Stepan, Jr., Board Member at Stepan SCL executed a significant insider sell, according to an SEC filing.

What Happened: After conducting a thorough analysis, Jr. sold 2,000 shares of Stepan. This information was disclosed in a Form 4 filing with the U.S. Securities and Exchange Commission on Tuesday. The total transaction value is $174,854.

The latest market snapshot at Tuesday morning reveals Stepan shares down by 0.0%, trading at $88.75.

Get to Know Stepan Better

Stepan Co manufactures and sells a variety of chemicals and chemical-based products. The company organizes itself into three segments based on product type. The surfactants segment, which generates the majority of revenue, sells cleaning agents used in detergents, shampoos, body wash, fabric softeners, toothpastes, and other personal-care products. Surfactants are chemical agents that affect the interaction between two surfaces. The polymers segment sells polyurethane used to manufacture rigid foam for thermal insulation, as well as phthalic anhydride used to make plastic components for the construction, automotive, and boating industries. The specialty products segment sells chemicals used in food and flavoring. Majority of Stepan's revenue comes from the United States.

Stepan: Financial Performance Dissected

Revenue Growth: Stepan's revenue growth over a period of 3 months has faced challenges. As of 31 December, 2023, the company experienced a revenue decline of approximately -15.15%. This indicates a decrease in the company's top-line earnings. As compared to competitors, the company encountered difficulties, with a growth rate lower than the average among peers in the Materials sector.

Key Profitability Indicators:

• Gross Margin: The company faces challenges with a low gross margin of 12.48%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Stepan's EPS lags behind the industry average, indicating concerns and potential challenges with a current EPS of -0.05.

Debt Management: Stepan's debt-to-equity ratio is below the industry average. With a ratio of 0.59, the company relies less on debt financing, maintaining a healthier balance between debt and equity, which can be viewed positively by investors.

Financial Valuation:

• Price to Earnings (P/E) Ratio: With a higher-than-average P/E ratio of 50.71, Stepan's stock is perceived as being overvalued in the market.

• Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 0.88, the stock presents an attractive valuation, potentially signaling a buying opportunity for investors interested in sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With a lower-than-industry-average EV/EBITDA ratio of 15.14, Stepan presents a potential value opportunity, as investors are paying less for each unit of EBITDA.

Market Capitalization Analysis: Below industry benchmarks, the company's market capitalization reflects a smaller scale relative to peers. This could be attributed to factors such as growth expectations or operational capacity.

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Why Insider Transactions Are Important

Insider transactions contribute to decision-making but should be supplemented by a comprehensive investment analysis.

Within the legal framework, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as per Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are mandated to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

Navigating the World of Insider Transaction Codes

Navigating through the landscape of transactions, investors often prioritize those unfolding in the open market, precisely detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Stepan's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.