Today, NewMarket Corporation has released its 10-K report, causing its shares to move 1.5% on the market, now trading at a price of $598.17.
NewMarket Corporation primarily engages in the manufacture and sale of petroleum additives, offering lubricant additives, engine oil additives, driveline additives, industrial additives, and fuel additives. It operates in North America, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and India.
In 2023, the company reported consolidated net sales of $2.7 billion, a decrease of $66 million, or 2.4% from 2022. The petroleum additives segment's net sales were approximately 2.4% lower than 2022 levels, with a decrease across all regions. The segment's gross profit and operating profit increased by $136 million when comparing 2023 to 2022. However, the company faced challenges from ongoing inflationary environment impacting it, including higher raw material and operating costs compared to 2022.
Interest and financing expenses were $37 million in 2023 and $35 million in 2022, primarily due to a higher average interest rate, partially offset by lower average outstanding debt. Other income (expense), net was income of $43 million in 2023 and $35 million in 2022. Income tax expense was $100 million in 2023 and $68 million in 2022, with an effective tax rate of 20.5% in 2023 and 19.6% in 2022.
The company generated cash from operating activities of $577 million in 2023, using it to make net payments of $361 million on its revolving credit facility, pay dividends of $85 million, fund capital expenditures of $48 million, and repurchase 119,075 shares of its common stock for $43 million.
For more information, read the company's full 10-K submission here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,290 | $2,190 | $2,011 | $2,356 | $2,765 | $2,738 |
| Gross Margins | 26% | 28% | 30% | 23% | 23% | 28% |
| Net Margins | 10% | 12% | 13% | 8% | 10% | 15% |
| Net Income (M) | $235 | $254 | $271 | $191 | $280 | $399 |
| Net Interest Expense (M) | $27 | $29 | $26 | $34 | $35 | $41 |
| Depreciation & Amort. (M) | $72 | $88 | $84 | $84 | $82 | $78 |
| Diluted Shares (M) | 12 | 11 | 11 | 11 | 10 | 10 |
| Earnings Per Share | $20.34 | $22.73 | $24.64 | $17.71 | $27.77 | $41.21 |
| EPS Growth | n/a | 11.75% | 8.4% | -28.12% | 56.8% | 48.4% |
| Avg. Price | $357.15 | $402.51 | $368.04 | $336.44 | $313.57 | $597.2381 |
| P/E Ratio | 17.56 | 17.71 | 14.94 | 19.0 | 11.29 | 14.49 |
| Free Cash Flow (M) | $123 | $278 | $191 | $86 | $52 | $447 |
| EV / EBITDA | 13.46 | 11.77 | 11.6 | 14.85 | 9.56 | 11.36 |
| Total Debt (M) | $771 | $643 | $599 | $1,489 | $1,004 | $779 |
| Net Debt / EBITDA | 1.92 | 1.17 | 1.2 | 4.11 | 2.14 | 1.19 |
| Current Ratio | 3.0 | 2.85 | 2.87 | 1.91 | 2.81 | 3.21 |
NewMarket Corporation's stock at $598.17 per share is likely undervalued due to its strong growth prospects and competitive advantage within the chemicals industry. The company's revenues are rapidly growing at a rate of 4.1%, and its operating margins and gross margins are outperforming industry averages, indicating a potential competitive edge. Additionally, NewMarket's earnings per share have grown at an annualized rate of 12.5% over the last 6 years.
However, there are some concerns regarding the company's decreasing capital expenditures and an inflated PEG ratio. Furthermore, NewMarket's total liabilities far exceed its current assets, with a net current asset level of $-252.86 million. The stock's current price of $598.17 also indicates that it is trading above its fair value, with a P/E ratio of 14.8 and a P/B ratio of 5.33.
It's important to note that this analysis serves as a general overview and is not personalized financial advice for any specific individual or entity. Investors should conduct thorough research and consider their own financial situation before making any investment decisions.
