Stepan Company Stock Beneish M Score

SCL Stock  USD 66.82  0.30  0.45%   
This module uses fundamental data of Stepan to approximate the value of its Beneish M Score. Stepan M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out Stepan Piotroski F Score and Stepan Altman Z Score analysis.
  
At this time, Stepan's Debt To Equity is quite stable compared to the past year. Interest Debt Per Share is expected to rise to 30.89 this year, although the value of Long Term Debt will most likely fall to about 211.6 M. At this time, Stepan's Capex To Depreciation is quite stable compared to the past year. EV To Sales is expected to rise to 1.24 this year, although the value of Days Sales Outstanding will most likely fall to 41.64.
At this time, it appears that Stepan Company is a possible manipulator. The earnings manipulation may begin if Stepan's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Stepan executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Stepan's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-1.83
Beneish M Score - Possible Manipulator
Elasticity of Receivables

1.95

Focus
Asset Quality

0.95

Focus
Expense Coverage

1.45

Focus
Gross Margin Strengs

1.68

Focus
Accruals Factor

1.45

Focus
Depreciation Resistance

1.0

Focus
Net Sales Growth

0.54

Focus
Financial Leverage Condition

1.0

Focus

Stepan Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Stepan's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Net Receivables443.2 M422.1 M
Sufficiently Up
Slightly volatile
Total Revenue1.3 B2.3 B
Way Down
Slightly volatile
Total Assets2.5 B2.4 B
Sufficiently Up
Slightly volatile
Total Current Assets894.5 M851.9 M
Sufficiently Up
Slightly volatile
Non Current Assets Total1.6 B1.5 B
Sufficiently Up
Slightly volatile
Property Plant Equipment1.3 B1.2 B
Sufficiently Up
Slightly volatile
Depreciation And Amortization110.6 M105.3 M
Sufficiently Up
Slightly volatile
Selling General Administrative72.9 M93.2 M
Significantly Down
Slightly volatile
Total Current Liabilities638.3 M607.9 M
Sufficiently Up
Slightly volatile
Non Current Liabilities Total565.9 M539 M
Sufficiently Up
Slightly volatile
Short Term Debt265.5 M252.9 M
Sufficiently Up
Slightly volatile
Long Term Debt211.6 M401.2 M
Way Down
Slightly volatile
Operating Income65.4 M58.6 M
Moderately Up
Pretty Stable
Total Cash From Operating Activities103.5 M174.9 M
Way Down
Slightly volatile
Long Term Investments26 M26.8 M
Sufficiently Down
Slightly volatile
Gross Profit Margin0.20.1194
Way Up
Pretty Stable

Stepan Company Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Stepan's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Stepan in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Stepan's degree of accounting gimmicks and manipulations.

About Stepan Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Other Operating Expenses

1.18 Billion

At this time, Stepan's Other Operating Expenses is quite stable compared to the past year.

Stepan Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Stepan. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201920202021202220232024 (projected)
Net Receivables276.8M301.3M419.5M436.9M422.1M443.2M
Total Revenue1.9B1.9B2.3B2.8B2.3B1.3B
Total Assets1.6B1.8B2.1B2.4B2.4B2.5B
Total Current Assets818.8M905.7M913.4M1.0B851.9M894.5M
Net Debt(116.9M)(189.1M)163.7M413.4M582.3M611.5M
Short Term Debt23.6M37.9M40.7M132.1M252.9M265.5M
Long Term Debt198.5M160.8M322.9M455.0M401.2M211.6M
Operating Income54.0M92.1M86.6M105.1M58.6M65.4M
Investments(112.7M)(139.0M)(376.8M)(308.1M)(308.1M)(292.7M)

Stepan ESG Sustainability

Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Stepan's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Stepan's managers, analysts, and investors.
Environmental
Governance
Social

About Stepan Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Stepan Company's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Stepan using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Stepan Company based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.

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When determining whether Stepan Company is a strong investment it is important to analyze Stepan's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Stepan's future performance. For an informed investment choice regarding Stepan Stock, refer to the following important reports:
Check out Stepan Piotroski F Score and Stepan Altman Z Score analysis.
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Is Specialty Chemicals space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Stepan. If investors know Stepan will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Stepan listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.873
Dividend Share
1.5
Earnings Share
2
Revenue Per Share
95.823
Quarterly Revenue Growth
(0.03)
The market value of Stepan Company is measured differently than its book value, which is the value of Stepan that is recorded on the company's balance sheet. Investors also form their own opinion of Stepan's value that differs from its market value or its book value, called intrinsic value, which is Stepan's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Stepan's market value can be influenced by many factors that don't directly affect Stepan's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Stepan's value and its price as these two are different measures arrived at by different means. Investors typically determine if Stepan is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Stepan's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.