Please ensure Javascript is enabled for purposes of website accessibility

Shares of Stepan Company Popped 9% After Record First-Quarter

By Daniel Miller - Apr 25, 2017 at 4:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Specialty chemical maker Stepan posted strong Q1 results as it offset a 4% drop in sales volume with higher prices on its products.

What happened?

Shares of Stepan Company (SCL -0.22%), a company that produces specialty chemicals and sells them to other manufacturers for a multitude of end products, closed Tuesday up 9.1% after the company released its first-quarter earnings.

So what

Stepan posted a solid quarter with increases from top-line sales down to bottom-line net income. Starting at the top, Stepan's Q1 net sales jumped 5% year over year to $468 million. What's impressive is that Stepan was able to do that despite 4% lower sales volume, thanks to prices that were up 10%. 

Operating income increased 3% to $46 million, and net income jumped 14% to just under $32 million. Stepan's adjusted net income checked in at $1.36 per share, a healthy increase from the prior year's $1.22 per share.

"The Company had a good start to the year and delivered record quarterly results," said Chairman, President and CEO F. Quinn Stepan Jr. in a press release. "The quarter benefited from structurally lower manufacturing costs, enhanced internal efficiencies and higher Polymer volumes."

Two chemists in a laboratory.

Image source: Getty Images.

Now what

With a record Q1 in the books, the rest of 2017 is shaping up to be solid for investors. Management believes growth will continue thanks to better  operational efficiency and growth in its core polymer markets. However, what investors will want to keep an eye on are its raw material costs, which could rise and put pressure on Stepan's margins. Still, management remains confident earnings will grow year over year.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Stepan Company Stock Quote
Stepan Company
$106.77 (-0.22%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.