Value
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 7.2 |
| P/S | 8.5 |
| EV/EBITDA | 5.1 |
| Fwd P/E | 4.0 |
- ▸Forward P/E: 29.8x
NEU · Why this verdict
Why NewMarket (NEU) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
NewMarket Corp is a specialty chemicals business with exceptional profitability metrics — 25% return on equity and 15% operating margins — but its international and supplier concentration risks, coupled with declining revenue and near-zero price upside, limit the investment case at current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Analyst price targets offer no meaningful upside from current levels, and the elevated put/call ratio of 1.52 combined with the stock trading above its options max-pain level of $390 signals that options markets are positioned for price weakness. Key risks | The put/call ratio declines below 1.0 as the stock consolidates and upside to a revised analyst target of more than 5% is restored. | Tripped↑Improving |
| CounterHigh put/call ratios in quality businesses can represent hedging activity rather than directional bearishness, and current momentum remains positive with rising on-balance volume. | ||
NewMarket generates a 25% return on equity and 15% operating margins, ranking among the best-in-class performers within its specialty chemicals peer group, with a Piotroski F-Score of 7 out of 9 confirming broad financial health. Quality breakdown | Return on equity remains above 20% and operating margins sustain above 12% over the next 12 months. | →Stable |
| CounterDespite strong margins, the lack of an identifiable competitive moat suggests pricing power may erode as raw material costs shift or competitors enter adjacent product lines. | ||
Over 61% of NewMarket's revenue comes from outside the United States and the company depends on single-source raw material suppliers, creating meaningful concentration risk from currency volatility and supply chain disruption. Bear case | International revenue concentration declines below 55% over the next 12 months through domestic growth, reducing the geographic risk profile. | ↑Improving |
| CounterInternational diversification can be a revenue resilience factor if domestic chemical markets weaken, and long-standing supplier relationships may reduce the practical risk of supply disruption. | ||
Revenue declined 4% year-over-year and the overall growth score of 1.2 is near the bottom of the range, signaling that the business is shrinking in real terms even as it maintains strong profitability. Growth breakdown | Revenue returns to positive growth above 2% year-over-year within the next 2 quarters. | →Stable |
| CounterRevenue contraction paired with strong profitability may reflect a deliberate mix shift toward higher-margin products rather than demand weakness. | ||
Analyst price targets offer no meaningful upside from current levels, and the elevated put/call ratio of 1.52 combined with the stock trading above its options max-pain level of $390 signals that options markets are positioned for price weakness.
Tripped↑ImprovingKey risks
- Expectation
- The put/call ratio declines below 1.0 as the stock consolidates and upside to a revised analyst target of more than 5% is restored.
CounterHigh put/call ratios in quality businesses can represent hedging activity rather than directional bearishness, and current momentum remains positive with rising on-balance volume.
NewMarket generates a 25% return on equity and 15% operating margins, ranking among the best-in-class performers within its specialty chemicals peer group, with a Piotroski F-Score of 7 out of 9 confirming broad financial health.
→StableQuality breakdown
- Expectation
- Return on equity remains above 20% and operating margins sustain above 12% over the next 12 months.
CounterDespite strong margins, the lack of an identifiable competitive moat suggests pricing power may erode as raw material costs shift or competitors enter adjacent product lines.
Over 61% of NewMarket's revenue comes from outside the United States and the company depends on single-source raw material suppliers, creating meaningful concentration risk from currency volatility and supply chain disruption.
↑ImprovingBear case
- Expectation
- International revenue concentration declines below 55% over the next 12 months through domestic growth, reducing the geographic risk profile.
CounterInternational diversification can be a revenue resilience factor if domestic chemical markets weaken, and long-standing supplier relationships may reduce the practical risk of supply disruption.
Revenue declined 4% year-over-year and the overall growth score of 1.2 is near the bottom of the range, signaling that the business is shrinking in real terms even as it maintains strong profitability.
→StableGrowth breakdown
- Expectation
- Revenue returns to positive growth above 2% year-over-year within the next 2 quarters.
CounterRevenue contraction paired with strong profitability may reflect a deliberate mix shift toward higher-margin products rather than demand weakness.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.4 |
| ROA | 7.2 |
| Gross margin | 2.3 |
| Op margin | 9.4 |
| Net margin | 7.6 |
| Current ratio | 8.7 |
| FCF quality | 7.0 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 25%
- ▸Strong margins: 15%
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
1.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.4 |
| EPS growth | 1.0 |
- ▸Declining revenue: -4%
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 5.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| erm sentiment | 5.0 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.2 |
| quality rank | 9.1 |
| growth rank | 0.7 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.8 |
| support resistance | 3.8 |
| 52w position | 8.0 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.6 |
| days to cover | 4.7 |
| volatility | 5.5 |
| beta | 9.6 |
| debt equity | 7.5 |
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 8.2 |
| dividend safety | 6.8 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:16d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
6.9%
Sizing output
AVOID
SetupRange Bound — RSI 46 mid-range, Bollinger mid-band
EdgeCatalyst-Driven — Earnings in 16d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Insider at 7.3) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 0.00 — supplementary context, not the trigger for this path.
The strongest dimensions are Insider at 7.3, Quality at 7.0, and Risk (lower is worse) at 6.6; the weakest are Growth at 1.2, Sentiment at 5.0, and Value at 5.2. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Profitability Metrics
Trip ifReturn on equity falls below 15% or operating margin compresses below 10% for 2 consecutive quarters.
- P2Geographic Supplier Concentration
Trip ifInternational revenue rises above 70% of total revenue for 2 consecutive reporting periods.
- P3Revenue Decline Growth Risk
Trip ifRevenue declines more than 8% year-over-year for 2 consecutive quarters.
- P4Upside Exhaustion Put Call WarningTripped
Trip ifPut/call ratio rises above 2.0 or price drops below $768 stop-loss level.