NEU NewMarket Corporation

NewMarket Corp. (NEU) recently jumped to a new all-time high after reporting excellent Q1 results that came in ahead of expectations. With three consecutive earnings surprises and rising estimates, this Zacks #1 rank stock is a momentum player.

Company Description

NewMarket Corp., through its subsidiaries, operates in the petroleum additives business. The company was founded in 1887 and has a market cap of $2.5 billion.

With earnings season in full swing, we got an update on NewMarkets business in late April when the company reported strong Q1 results that came in ahead of expectations.

First-Quarter Results

Revenue for the period was up 29% from last year to $508 million. Earnings also came in strong at $3.53, 18% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 8% over the last four quarters.

NewMarket was also busy returning value to its shareholders during the quarter, repurchasing 191,000 shares at an average price of $126.40.

Financial Position

Moving forward, NEU will continue to benefit from its strong financial profile, with cash and short-term investments of $50 million against total debt of $261 million. Its long-term debt to capital ratio of 33% is well below the industry average of 95%.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year adding 70 cents to $14.16 and the next-year estimate gaining $1.15 to $15.17, a solid 7% growth projection.

Valuation

But in spite of the recent gains, NEU still has value, trading with a forward P/E of 12.5X, a discount to the industry average of 14.4X.

12-Month Chart

On the chart, NEU Has been jumping higher for the last few months, once after Warren Buffet announced it was buying industry competitor Lubrizol and also on the good quarter. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
 
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