Stepan Co (SCL)

Stepan Co.'s stock price declined by 25.7% leading up to November 2025. In Q2 2025, the company reported a 27% year-over-year increase in adjusted net income, but faced challenges in free cash flow. Operational challenges, including higher operating costs and a fraud incident, impacted financial performance. In Q3 2025, sales increased by 8%, but adjusted net income decreased by 54%. The company increased its quarterly cash dividend and sold its manufacturing assets in Lake Providence, Louisiana, and its Philippine assets. The new Pasadena alkoxylation facility became operational in Q1 2025 and is expected to contribute fully in the second half of 2025.

The chemical industry is cyclical, influenced by demand trends, supply chain considerations, and raw material availability. The Surfactants segment experienced softer demand in commodity consumer products, but growth in agricultural and oilfield markets. The Polymers segment experienced lower demand due to inventory destocking and lower construction activities, with an expected seasonal pickup in the second half of the year. The Specialty Products segment saw a surge in net sales in Q3 2025 due to order timing in the pharmaceutical business, which was a one-time boost.

Stepan Co. is a global manufacturer of specialty and intermediate chemicals, founded in 1936. It operates in the Basic Materials sector and the Specialty Chemicals industry, delivering innovative chemical solutions. The company operates through three segments: Surfactants, which produces ingredients for cleaning compounds; Polymers, which produces products like phthalic anhydride and polyurethane polyols; and Specialty Products, which focuses on chemicals for consumer applications.

Stepan Co. has a global presence with facilities in North America, South America, Europe, and Asia. The majority of its revenue comes from the United States, with significant contributions from France, Poland, the United Kingdom, Brazil, and Mexico.

Stepan Co.'s reputation was impacted by a criminal social engineering fraud event in July 2024, resulting in pre-tax charges and affecting investor sentiment. The company emphasizes innovation and sustainability, investing in research and development. Its long history of dividend increases reflects financial discipline and commitment to shareholder value.

Stepan Co. has a mixed ownership structure. Institutional investors hold approximately 73.61% to 85.85% of the company's stock, with major holders including BlackRock, Inc. and Vanguard Group Inc. Individual investors hold approximately 10% to 21.31% of the stock, and insiders own about 5.08% to 27.26% of the shares. F. Quinn Stepan Jr. is a significant individual shareholder.