STEPAN CO

Where It Passes

Where It Falls Short

• Valuation0% pass✓ 5✗ 23▾

  No clean pass — all 13 investors flag at least one valuation criterion

  Price / Book Value per Share1.2x

  ✗Dreman< 1.2x✓Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Price / 3-yr avg EPS33.2x

  ✗Graham<= 15x

  Price-to-Book Ratio1.2x

  ✓Graham<= 1.5x

  P/E x P/B40.10

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)P/E 32.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value1.2%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.2%, ROC=1.5%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS32.4x

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)10.2x

  ✗Dreman< 8x

  Valuation ReasonablenessP/E=32.4x, OE Yield=3.4%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldP/E=32.4x, FCF Yield=1.7%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical AverageP/E=32.4x, P/B=1.2x

  ✓MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic Value-121.3% (IV=$30.00 vs Price=$66.38)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per Share59.2x

  ✗Ackman<= 25

  Price vs. Trailing Low153% of trailing low ($43.35)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization+0.29%; #3118/6340 (top 49.2%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization+0.8076; #1904/6449 (top 29.5%)

  ✓AsnessTop 30% of eligible cross-section

  Price / Diluted EPS32.4x

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E-0.48

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per Share1.35x

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change+25.2%

  ✓SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+1.6796; #1225/5247 (top 23.3%)

  ✗OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization+0.30%; #2484/4519 (top 55.0%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+26.61%; #1119/6202 (top 18.0%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Valuation models10% pass✓ 1✗ 9▾

  Models split on SCL at $66.38 — fair values range $9.27–$146.28

  Graham fair value$50.35

  ✗Graham-31.8% margin vs $66.38

  Buffett fair value$26.33

  ✗Buffett-152.1% margin vs $66.38

  Greenblatt fair value$24.16

  ✗Greenblatt-174.8% margin vs $66.38

  Dreman fair value$30.00

  ✗Dreman-121.3% margin vs $66.38

  Munger fair value$13.12

  ✗Munger-405.9% margin vs $66.38

  Pabrai fair value$43.41

  ✗Pabrai-52.9% margin vs $66.38

  Akre fair value$146.28

  ✓Akre+54.6% margin vs $66.38

  Marks fair value$61.45

  ✗Marks-8.0% margin vs $66.38

  Ackman fair value$9.27

  ✗Ackman-616.1% margin vs $66.38

  Templeton fair value$54.90

  ✗Templeton-20.9% margin vs $66.38
• Growth13% pass✓ 4✗ 9▾

  7 of 8 flag SCL's growth — Graham, Lynch, Dreman +4 more

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)P/E 32.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-17.8%

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: 4.9% vs Rev: 10.0%

  ✓LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency27/27 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth-6.3%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency3/5 years with positive EPS growth

  ✓AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR-17.8% CAGR over 5 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 11.9% -> 11.6%, operating margin 2.5% -> 3.4%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR4.5%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR-17.8% over 5 years

  ✗Neff7%-20% annualized
• Efficiency13% pass✓ 2✗ 9▾

  7 of 8 flag SCL's efficiency — Graham, Buffett, Greenblatt +4 more

  Current Ratio1.32

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)6.1%

  ✗Buffett> 10%

  ROIC - WACC-3.9%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)1.5%

  ✗Greenblatt> 25%

  Current Ratio Change YoY1.21 -> 1.29

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.95x -> 0.99x

  ✓PiotroskiImproved YoY

  Current Assets / Current Liabilities1.32

  ✗Dreman> 1.5

  Return on Invested Capital1.0%

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=2.5%; FY2024: ROIC=3.1%; FY2025: ROIC=3.3%

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC0.0% (RR=0% x ROIC=1.0%)

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)0/5 years above 12% (latest 3.3%)

  ✗SleepROIC > 12% in a majority of years
• Debt & Leverage17% pass✓ 4✗ 11▾

  10 of 12 flag SCL's debt & leverage — Graham, Buffett, Lynch +7 more

  LT Debt vs Net Current AssetsLT Debt $341.7M vs NCA $239.8M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: 0.50, IC: 2.6x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / Equity0.52

  ✗Lynch< 0.33

  Cash - Long-term Debt$-243.6M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change14.43% -> 14.46%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities1.32

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity0.52

  ✓Dreman< 0.8✓Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✓SchlossD/E < 1.00x

  Debt Levels0.52

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=2.6x, D/EBITDA=3.1x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity0.52

  ✓Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)-0.5203; #2510/4210 (top 59.6%)

  ✗AsnessTop 30% of eligible cross-section
• Profitability19% pass✓ 10✗ 25▾

  13 of 16 flag SCL's profitability — Graham, Buffett, Lynch +10 more

  Positive EPS (10 years)25/28 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)27/28 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)7.4%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)3.4% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$50.4M

  ✓BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)P/E 32.4x (growth N/A)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR-17.8%

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROE0.4%

  ✗Lynch> 15%

  EBIT / Enterprise Value1.2%

  ✗Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=1.2%, ROC=1.5%

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets1.99%

  ✓PiotroskiROA > 0

  ROA Change YoY2.19% -> 1.99% (delta: -0.20%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=6.27%, ROA=1.99%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY12.5% -> 11.6%

  ✗PiotroskiImproved YoY

  Pre-Tax Income / Revenue0.1%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity0.4%

  ✗Dreman> 12%

  Margin of SafetyP/E=32.4x, P/B=1.2x

  ✓PabraiP/B < 1.5 or P/E < 15

  Return on Equity3.8% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic Value-121.3% (IV=$30.00 vs Price=$66.38)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency27/27 years positive

  ✓MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue0.9%

  ✗Ackman>= 15%

  Net Income / Shareholders Equity0.4%

  ✗Ackman>= 15%

  5-Year EPS CAGR-17.8% CAGR over 5 years

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend2.5% (2023) -> 3.4% (2025)

  ✓TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 11.9% -> 11.6%, operating margin 2.5% -> 3.4%

  ✓SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization+0.29%; #3118/6340 (top 49.2%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets+12.71%; #2594/3702 (top 70.1%)

  ✗AsnessTop 30% of eligible cross-section

  Net income / positive book equity+0.35%; #2879/5226 (top 55.1%)

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0217; #1537/5884 (top 26.1%)

  ✓AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR-17.8% over 5 years

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years10/10 years positive

  ✓Schloss>= 70% positive over 5-10 observed years (app rule)
• Verdicts20% pass✓ 3✗ 12▾

  Split decision: 11 FAIL · 2 PASS · 2 NEUTRAL · 1 BUY

  Overall verdict

  ✗GrahamFAIL (3/9)✗BuffettFAIL (2/9)✗LynchFAIL (1/7)✗GreenblattRank #1772✓PiotroskiPASS (F-Score 5)✗DremanFAIL (2/11)✗MungerFAIL (1/4)✗PabraiFAIL (1/3)✗AkreFAIL (1/6)✗MarksFAIL (3/5)✗AckmanFAIL (3/9)•TempletonNEUTRAL (5/8)✓SleepPASS (3/6)✓AsnessBUY (Rank #708/2370 (Top 29.9%))✗NeffFAIL (3/6)•SchlossNEUTRAL (4/7)✗OshaughnessyFAIL (Rank #484/963 (Top 50.3%))
• Cash Flow50% pass✓ 6✗ 6▾

  5 of 10 pass — Lynch, Dreman, Pabrai +2 more object

  Free Cash Flow Proxy$50.4M

  ✓BuffettPositive and growing

  FCF Positive and Growing$4.6M

  ✗LynchPositive and growing

  Operating Cash Flow$147.9M

  ✓PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=6.27%, ROA=1.99%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)10.2x

  ✗Dreman< 8x

  P/E or FCF YieldP/E=32.4x, FCF Yield=1.7%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive19/25 years FCF positive

  ✓MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap0.3%

  ✗Ackman>= 4%

  Price / FCF per Share59.2x

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency25/25 years positive

  ✓SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$4.6M

  ✓Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization+0.30%; #2484/4519 (top 55.0%)

  ✗OshaughnessyTop 10% of eligible cross-section