Seaport Global’s decision to upgrade Stepan (SCL) from Neutral to Buy puts fresh attention on this specialty chemicals company, as ratings changes can quickly shift how investors view risk and opportunity.

Stepan’s recent 7 day share price return of 9.86% and 30 day gain of 19.27% suggest momentum has picked up ahead of Seaport’s rating change. However, the 1 year total shareholder return decline of 10.15% and 5 year total shareholder return decline of 48.61% show a weaker longer term picture.

If this kind of turnaround story has your attention, it can also be a good moment to broaden your search and look at fast growing stocks with high insider ownership.

With Stepan trading at $56.14 against a Seaport Global price target of $75 and an indicated intrinsic discount of 57.81%, the key question is whether this reflects a genuine value opportunity or a market that is already pricing in future growth.

Most Popular Narrative: 25.1% Undervalued

Against Stepan’s last close of $56.14, the most followed narrative points to a fair value of $75, so the current price sits well below that estimate.

The startup of the new Pasadena, Texas site is expected to reach full contribution in the second half of 2025, which could boost volume growth and supply chain savings. This is likely to impact revenue and margins positively.

It may be useful to understand what kind of revenue path and margin profile are consistent with that $75 fair value. The narrative refers to strong earnings compounding along with a lower future earnings multiple. It could also be helpful to see how those elements are combined and what discount rate is used to calculate today’s value.

Result: Fair Value of $75 (UNDERVALUED)

However, this depends on risks such as ongoing negative free cash flow and pressure on margins from higher raw material costs or weaker selling prices in key segments.

Build Your Own Stepan Narrative

If you look at these numbers and reach a different conclusion, or just want to test your own assumptions, you can build a full narrative yourself in under three minutes, starting with Do it your way.

A great starting point for your Stepan research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Stepan has sparked your interest, do not stop there, put more ideas on your radar now so you are not catching up later.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.