NewMarket Shares Soared: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of petroleum additives maker NewMarket (NYSE: NEU  ) soared as much as 16% today after reporting first-quarter results that blew past Wall Street estimates.

So what: NewMarket earned $3.53 per share in adjusted earnings on $508.1 million in Q1 revenue. Analysts were expecting $2.90 and $425.78 million, respectively, according to Yahoo! Finance data. Management also authorized a 36% increase in the dividend.

Now what: Interestingly, even with today's rally, NewMarket is valued at a fraction of the long-term earnings growth the Street expects. The stock's 0.74 PEG ratio reflects the potential bargain that still remains. But be careful. The PEG is an indicator and nothing more, and if used improperly, can mislead even the best investors. Commit to further study of the underlying business before you commit to buying shares.

Interested in more info on NewMarket? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. You can try any of our Foolish newsletter services free for 30 days.

Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 30, 2011, at 3:49 PM, suzan300 wrote:

    I called NewMarket last week noticing the big jump in the stock. I have never called a company before, but couldn't find any news on them. The gentleman I spoke with advised that there wasn't any particular news, but that Buffet had purchased their competitor stating the competitor was undervalued.

    I decided to sell and then!!!!!!!!!! the stock price jumped again by $25 a share.

    I wasn't really happy with the answer I received from the company and certainly was unhappy that I sold "early."

    My investment company told me it had something to do with Japan's recent problems - this was denied by the company, although they do have business in Japan.

    Who can we trust???

Add your comment.

DocumentId: 1479719, ~/Articles/ArticleHandler.aspx, 7/30/2014 1:39:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement