A closer look at NetTrarket (Neu) Valuation after increasing dividend and growth drives soft Q3 results

NewRarket reported a dip in third-quarter revenue and profit, citing lower product shipments and higher costs. Alongside these results, the company increased its dividend in the quarter and continued to invest in new strategies for growth and operational development.

See our latest analysis of Newmarket.

Even with the soft quarterly numbers and the recent pullback last month, the Newmarket share price is still riding a strong wave, boasting a 50.4% rise this year. Its three-year return of 171% is outstanding for achieving compounded returns. The recent issues and the high dividend have confirmed the confidence of the investors and helped to keep the momentum high.

If NewTarkt’s combination of Capital Return and reinvestment is re-evaluating your portfolio, this may be the right time to explore fast-growing stocks with large holdings.

The latest numbers may show a slowdown, but strong cash returns and growth plans are still in play. Does NewArket’s latest pull off a rare buying opportunity, or is the market already ready for its next chapter?

NewRarket is currently valued at a price-to-earnings (P/E) multiple of 16.2 times, higher than its peers. This puts the stock in an expensive bracket relative to similar companies at its close of $767.9.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of earnings. In the chemical sector, it is a key measurement tool where profit margins are often volatile and tied to commodity cycles. A high IP / E can indicate the importance of the market case for future growth or the strength of the influence.

However, the P/E of 16.2x stands above the peer average (15.6x), suggesting the market pays a premium compared to competitors. While this may be achieved through things like revenue or strategic efforts, they set expectations for the company to support the attacker. On the contrary, the stock looks clearly cheap compared to the broader US chemical sector, which trades at a P/E of 25.9x. These NewMarket brands may be attractively priced in their broader sector even if they carry a small premium compared to direct peers.

See what the numbers say about this price – find out in our valuation breakdown.

Result: 16.2X Price Earnings (Overvalided)

However, slowing shipping growth and rising costs could put pressure on Newmarket’s earnings. This may present challenges to its premium valuation in the future.

Find out about the key risks in this new narrative.

But the SWS DCF model takes a much longer view and proposes something quite different. According to this method, Newmarket is trading at a sharp discount of more than 50% below its estimated fair value. If accurate, this is an upward trend that the average income ratio is ignoring. Which method will prove ENDED as a Market Site Shift?

See how the SWS DCF model arrives at its fair value.

Simply Wall St generates discounted cash flow (DCF) for every stock in the world every day (check Newmarket for example). We show the calculation of the whole figure. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our Stock screen to find the 839 underlying stocks based on their cash flow. If you keep the screen until it notifies you when new companies match – so you don’t miss a potential opportunity.

If you think there is more to the story or you want to dig into the details yourself, you can easily create your own which takes a few minutes. Make it your way

A good starting point for your Newmarket research is our analysis to highlight 3 key rewards and 1 key indicator that can influence your investment decision.

Serious about making your money work harder? Don’t ignore these unique opportunities. Each one can be the difference between settling and taking your next victory.

This article by simply Wall ST is general in nature. We provide commentary based on historical data and analysis of the analysis situation only using an unbiased approach and our articles are not intended to be financial advice. It is not a recommendation to buy or sell any stock, and it does not take into account your goals, or your financial situation. We aim to deliver long-term analysis focused on primary data. Note that our analysis may not refer to the company’s critical price announcements or relevant items. Simply Wall St has no position in any of the stocks mentioned.

Companies discussed in this article include U.

Have feedback on this article? Worried about content? Contact us directly. Alternatively, email editolial-tiam@simplywallst.com