Operating Margin - Stepan Co (NYSE:SCL)

Watchlist Manager

Watchlist

Price: 47.99 USD 1.33%

Market Cap: 1.1B USD

3.3%

Current

Average

5.9%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

3.3%

Operating Profit

75.7m

Revenue

2.3B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
US		Stepan Co NYSE:SCL	1.1B USD	3%
US		Sherwin-Williams Co NYSE:SHW	80.2B USD	16%
US		Ecolab Inc NYSE:ECL	75.3B USD	18%
JP		Shin-Etsu Chemical Co Ltd TSE:4063	9.2T JPY	25%
CH		Givaudan SA SIX:GIVN	29B CHF	19%
CN		Wanhua Chemical Group Co Ltd SSE:600309	234.1B CNY	9%
IN		Asian Paints Ltd NSE:ASIANPAINT	2.7T INR	15%
DK		Novozymes A/S CSE:NZYM B	165.6B DKK	25%
CH		Sika AG F:SIKA	19.9B EUR	15%
US		PPG Industries Inc NYSE:PPG	23.2B USD	15%
CH	D	DSM-Firmenich AG AEX:DSFIR	18.4B EUR	4%

Stepan Co
Glance View

Economic Moat

None

Market Cap

1.1B USD

Industry

Chemicals

Stepan Company, a stalwart presence in the chemical industry, navigates the intricate dance of the global economy through its specialization in surfactants, polymers, and specialty products. Established in 1932, this Illinois-based enterprise has carved out its niche by focusing on the production of vital ingredients that feed into everyday consumer products and industrial applications. Surfactants, essential in detergents, personal care products, and beyond, constitute a significant portion of Stepan's portfolio. By transforming raw materials into efficient and effective cleaning and conditioning agents, Stepan ensures its products are indispensable to the formulations of major consumer brands worldwide. Its reach doesn't stop at surfactants; Stepan is also a key player in producing polymers used in energy-saving insulation for construction, another testament to its role in meeting the diverse demands of modern industries. The company’s financial engine is driven by its ability to innovate and adapt within these core markets, capitalizing on a blend of scientific expertise and strategic partnerships. Stepan seamlessly integrates sustainability into its operations, producing eco-friendly products, which increasingly resonate in today’s environmentally conscious market. This commitment not only enhances its competitive edge but also promotes long-term stability and growth—a crucial aspect in the cyclical world of chemicals. The company’s adeptness at optimizing its supply chain and maintaining robust relationships with large, often multinational clients, illustrates a business model grounded in efficiency and continuous improvement. In an arena where agility and adaptation are paramount, Stepan deftly harnesses its resources to produce value for shareholders, while consistently broadening its footprint across the globe.

View SCL Analysis

SCL Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

US	Johnson & Johnson NYSE:JNJ	Pharmaceuticals
US	Berkshire Hathaway Inc NYSE:BRK.A	Financial Services
US	Bank of America Corp NYSE:BAC	Banking
US	Mastercard Inc NYSE:MA	Technology
US	UnitedHealth Group Inc NYSE:UNH	Health Care
US	Exxon Mobil Corp NYSE:XOM	Energy
US	Pfizer Inc NYSE:PFE	Pharmaceuticals
US	Palantir Technologies Inc NYSE:PLTR	Technology
US	Nike Inc NYSE:NKE	Textiles, Apparel & Luxury Goods
US	Visa Inc NYSE:V	Technology
CN	Alibaba Group Holding Ltd NYSE:BABA	Retail
US	JPMorgan Chase & Co NYSE:JPM	Banking
US	Coca-Cola Co NYSE:KO	Beverages
US	Walmart Inc NYSE:WMT	Retail
US	Verizon Communications Inc NYSE:VZ	Telecommunication
US	Chevron Corp NYSE:CVX	Energy

I	Ingevec SA SGO:INGEVEC	159.03 CLP 0.36%
R	Rich Sport PCL SET:RSP	1.21 THB 0.83%

	Johnson & Johnson NYSE:JNJ	206.28 USD -0.5%
	Berkshire Hathaway Inc NYSE:BRK.A	750 093.39 USD 0.01%
	Bank of America Corp NYSE:BAC	56.13 USD 0.45%
	Mastercard Inc NYSE:MA	577.64 USD 0.34%
	UnitedHealth Group Inc NYSE:UNH	326.04 USD 0.27%
	Exxon Mobil Corp NYSE:XOM	119.02 USD 0.74%

	Franklin Covey Co NYSE:FC	17 USD 0.71%
	Mohawk Industries Inc NYSE:MHK	107.95 USD -0.58%
	Ardmore Shipping Corp NYSE:ASC	10.65 USD -1.3%
	ASGN Inc NYSE:ASGN	49.06 USD 0.53%
	Skyworks Solutions Inc NASDAQ:SWKS	64.83 USD -0.63%
	Weatherford International PLC NASDAQ:WFRD	80.47 USD 2.08%

	Johnson & Johnson NYSE:JNJ	206.28 USD -0.5%
	Bank of America Corp NYSE:BAC	56.13 USD 0.45%
	Mastercard Inc NYSE:MA	577.64 USD 0.34%
	Salesforce Inc NYSE:CRM	262.02 USD -0.99%
	Abbvie Inc NYSE:ABBV	230.34 USD 1.07%
	Home Depot Inc NYSE:HD	344.97 USD -0.41%

Stepan Co
NYSE:SCL