Bear Of The Day: Stepan (SCL)

Stepan (SCL) is a Zacks Rank #5 (Strong Sell) after the company recently posted a miss and the stock has sold off as a result.  This article will look at why this stock is a Zacks Rank #5 (Strong Sell) as it is the Bear of the Day.Description                                              Stepan Company is a major manufacturer of specialty and intermediate chemicals used in a broad range of industries. Stepan is a leading producer of surfactants, which are the key ingredients in consumer and industrial cleaning compounds. The Company is also a leading supplier of polyurethane polyols used in the expanding thermal insulation market and C.A.S.E. (Coatings, Adhesives, Sealants, and Elastomers) industries..Earnings HistoryWhen I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.In the case Stepan (SCL) I see the company has beat the Zacks Consensus Estimate in two of the last four quarters that Zacks has data for and missed on two as well.  This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.The most recent quarter saw the company report EPS of $0.52 when the consensus was calling for $0.92.  That 40 cent miss translates into a negative earnings surprise of 43.5%.Earnings EstimatesThe Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower.  For Stepan (SCL)  I see annual estimates for next year moving lower of late.The current fiscal year consensus number has held still at $3.33 over the last 60 days. The next year has moved from $4.43 to $4.01 over the last 60 days.Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).It should be noted that a lot of stocks in the Zacks universe are seeing negative earnings estimate revisions.  That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Stepan Company (SCL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks