SCL
Stepan Company
$52.07
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 13.4% below fair value
You pay
$52.07
Bear
$48.10
Fair
$60.12
Bull
$72.14
Bear
$48.10
-7.6%
$4.01 × 12x P/E
Fair
$60.12
+15.5%
$4.01 × 15x P/E
Bull
$72.14
+38.6%
$4.01 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
13.0x
Summary
Applying a 15x P/E to adjusted EPS of $4.01, the base-case value is $60.12 per share. DDM cross-check: $37.75.
Warnings
The company's reported profits differ from official accounting profits by 96%. Check what costs are being left out of the adjusted number.
Dividend-based valuation: $37.75 (below our primary estimate by 37%). Large gaps may signal the dividend doesn't reflect full earning power.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples