Insider Move: F. Quinn Stepan, Jr. Invests $124K In Stepan Stock

F. Quinn Stepan, Jr., Board Member at Stepan SCL, reported an insider buy on May 14, according to a new SEC filing.

What Happened: Jr. made a significant move by purchasing 1,396 shares of Stepan as reported in a Form 4 filing with the U.S. Securities and Exchange Commission. The transaction's total worth stands at $124,983.

Stepan's shares are actively trading at $87.89, experiencing a down of 0.0% during Wednesday's morning session.

Delving into Stepan's Background

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.

Breaking Down Stepan's Financial Performance

Decline in Revenue: Over the 3 months period, Stepan faced challenges, resulting in a decline of approximately -15.35% in revenue growth as of 31 March, 2024. This signifies a reduction in the company's top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Materials sector.

Evaluating Earnings Performance:

• Gross Margin: The company faces challenges with a low gross margin of 12.75%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): Stepan's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 0.61.

Debt Management: With a below-average debt-to-equity ratio of 0.58, Stepan adopts a prudent financial strategy, indicating a balanced approach to debt management.

Market Valuation:

• Price to Earnings (P/E) Ratio: Stepan's stock is currently priced at a premium level, as reflected in the higher-than-average P/E ratio of 52.95.

• Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 0.91, 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): At 14.97, Stepan's EV/EBITDA ratio reflects a below-par valuation compared to industry averages signalling undervaluation

Market Capitalization Analysis: Positioned below industry benchmarks, the company's market capitalization faces constraints in size. This could be influenced by factors such as growth expectations or operational capacity.

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Uncovering the Importance of Insider Activity

It's important to note that insider transactions alone should not dictate investment decisions, but they can provide valuable insights.

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

Notably, when a company insider makes a new purchase, it is considered an indicator of their positive expectations for the stock.

Conversely, insider sells may not necessarily signal a bearish stance on the stock and can be motivated by various factors.

Navigating the World of Insider Transaction Codes

Examining transactions, investors often concentrate on those unfolding in the open market, meticulously 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 indicates 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.