NEWMARKET CORPORATION (NEU): what the price requires

At today's price, NEWMARKET CORPORATION (NEU) is priced for -4.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/NEU

Headline

FieldValue
TickerNEU
CompanyNEWMARKET CORPORATION
Current price$757.91/sh
CompositionLubricant additives 79% / Fuel additives 14% / Specialty materials 7% / All other 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed9.3%
Operating margin today20.9%
Margin compression implied-11.6pp
Implied growth-4.3%
Multiple paid14x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.2pp.

Reconcile: at the x-ray's 9.3% required return this reads ~4.9%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.76σ
cohort percentile (of 76 peers)26
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.59x5expensive
Earnings1.82x3expensive
Relative1.65x3expensive
Growth1.55x3expensive

Families that call it expensive: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$489.781.55xyesFCF base $0.4B, growth -3% (input: historical growth), terminal g 0.5%, WACC 8.2%, 5yr projection
DCF Exit MultipleGrowth$814.740.93xyesExit EV/EBITDA: 10.3x / 12.3x / 14.3x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$580.581.31xyesP/E 14x (static sector reference · 2026-04), scenarios: 11.9x / 14.0x / 16.1x (bear / base = reference held flat / bull), EV/EBITDA 9.28x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$476.541.59xyesBV/sh $185.88, ROE (TTM) 23.7%, ke 9.3%
Two-Stage Excess ReturnAsset$763.100.99xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$489.211.55xyesRev $2.7B, growth -3% (input: historical growth; tapered), Terminal P/S: 2.2x / 2.6x / 3.0x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$416.381.82xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.46B × (1−22%) / WACC 8.2% → EPV (no growth)
Residual IncomeAsset$697.081.09xyesBV $185.88 + 5yr PV of (ROE (TTM) 23.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$428.001.77xyes√(22.5 × EPS $43.80 × BVPS $185.88) — Graham's conservative floor
EV/EBITDA RelativeRelative$458.371.65xyesEBITDA $0.65B × sector EV/EBITDA 8.0x
FCF YieldEarnings$399.391.90xyesFCF $431.9M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$36.7120.65xyesEPS $43.80 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$94.728.00xyesBV $185.88 × (ROIC 4.2% / WACC 8.2%)
P/Sales SectorRelative$433.531.75xyesRevenue $2.69B × sector P/S 1.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$473.511.60xyesEPS $43.80 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$884.6m
Net debt / NOPAT (after-tax)1.97x
Net debt / operating income (pre-tax)1.53x
Interest coverage15.0x
Share count CAGR (buyback)-2.4%
Burning cashno

Bullet Takeaways

The single most decisive metric for NewMarket is the durability of its petroleum-additives margin, because the whole verdict turns on it. The company earns a roughly 20% operating margin in a concentrated additives industry, and at $780.84 (June 27, 2026) the price pays only about 14x company-wide operating income, low enough that it implies operating profit actually declines about 3.4% per year for five years.

That low implied bar is the crux: if the additives franchise merely holds its margin rather than shrinking, the price looks conservative. The static valuation families all read richly valued on the surface, yet the inversion classifies the priced-in assumption as within range precisely because the price asks for so little.

The balance sheet is solid: net debt of about $885 million, roughly 1.7x operating income, with interest coverage near 14x. NewMarket is a steady, cash-generative holding company (Afton, Ethyl, AMPAC) priced for stagnation, where the question is whether the additives moat is as durable as its history suggests.

Bull Case

The one number that decides NewMarket is whether its petroleum-additives operating margin, around 20%, is durable, because the price is paying so little for it that even flat performance flips the verdict in the bull's favor. At about 14x operating income the price implies operating profit declining roughly 3.4% per year for five years. That is a remarkably low bar for a business with NewMarket's economics: if the additives franchise simply holds, the stock is undervalued by the price's own logic, and any growth at all is upside the market is not paying for.

The durability case rests on the structure of the additives industry. Lubricant and fuel additives are a concentrated business dominated by a handful of global players, and the products are technically demanding, formulated to reduce friction, prevent wear, control sludge and oxidation, and prevent rust, and sold to lubricant manufacturers who blend them to meet strict industry and OEM specifications (FY2025 10-K, accession 0001282637-26-000005). Switching an additive supplier means requalifying formulations against those specifications, which makes the customer relationships sticky and the pricing rational. That is why NewMarket has historically earned high, stable returns on capital and converted them into consistent cash and aggressive shareholder returns.

The portfolio is also gaining a growth leg outside the mature core. The AMPAC specialty-materials segment, which makes ingredients for solid rocket motors used in aerospace and defense, grew in the most recent quarter, helped by the Calca Solutions business acquired in October 2025, with specialty materials sales rising to $58.1 million from $53.7 million. Defense-linked specialty materials are a higher-growth, strategically important market, and they diversify NewMarket beyond the cyclicality of engine-oil demand. With net cash generation strong, interest coverage near 14x, and the price implying decline, the bull case is simply that a durable, well-run additives oligopoly with a growing defense-materials arm is priced as if it will slowly fade, and it has shown no sign of doing so.

Bear Case

The qualitative observation that should worry a NewMarket holder is that the core business just shrank, and a low multiple on a shrinking business is not the bargain it appears to be. The most recent quarter showed net income falling to $118.1 million, or $12.62 per share, from $125.9 million, or $13.26, a year earlier, and the petroleum-additives segment, which is roughly four-fifths of the company, saw sales drop to $609.8 million from $645.6 million on a 7% decline in shipments driven by softness in lubricant additives. The price implies a gentle 3.4% annual decline, but the latest data shows the decline already underway. The question the bear poses is whether that softness is a blip or the leading edge of a structural fade.

The structural concern behind the numbers is the long-term direction of the end market. Engine-oil-additive demand is tied to the global vehicle fleet, miles driven, and oil-change intervals, and the slow shift toward electric vehicles, which do not need engine-oil additives, is a genuine multi-decade headwind for the largest part of the business. The price already reflects modest erosion, but if the EV transition or extended drain intervals accelerate the decline beyond the implied 3.4%, the additives franchise becomes a melting ice cube rather than a stable annuity, and the 14x multiple would prove too high, not too low.

The valuation evidence supports caution. On the family view, no standard frame reaches the price: the asset, earnings-power, peer-multiple, and even growth methods all read the stock as richly valued relative to a steady-state business, which is the methods registering that the recent results and the secular outlook do not comfortably support the quote. Net debt of about $885 million is manageable but not trivial against a business whose core is contracting. The bear case is not a collapse, NewMarket is profitable and well capitalized, it is that the market is treating a structurally challenged cash cow as a stable one, and the recent shipment decline is the early evidence that the gentle fade the price assumes may not stay gentle.

Valuation

At the current price the market is paying about 14x company-wide operating income, which implies operating growth of roughly negative 3.4% per year over a five-year stage. The solve runs at a cost of capital near 7.8% with 4% terminal growth, and each point of cost of capital moves the implied growth by about 6.3 points. Keep the figure approximate; it is a single inversion. The key point is that the price embeds a slow decline, not growth, which is an unusual thing for the market to pay even 14x for.

The family pattern is worth reading carefully. On the surface, no valuation family reaches the price, all of them, asset, earnings-power, peer-multiple, and growth, read richly valued, yet the inversion classifies the priced-in assumption as within range. The reconciliation is that the static methods are anchored to a steady-state business while the price is paying for a mild decline, so the labels reflect different reference points. The reverse-DCF range centers well above the current price with an acceptable reliability flag, which says that if the business merely holds flat rather than declining, fair value is materially higher.

The judgment is therefore a single question: is NewMarket's additives margin durable or fading? If durable, the price implying a 3.4% annual decline is too pessimistic, and the stock is cheap with the AMPAC defense-materials arm as free upside. If the EV transition and demand softness drive a steeper decline, the same 14x multiple sits on a shrinking earnings base and is not cheap at all. The recent 7% shipment drop is the data point that keeps the question open, and it is why the valuation is best read as a bet on the durability of a mature franchise rather than as an obvious value.

Catalysts

The most recent print, Q1 2026 (reported April 2026), showed net income of $118.1 million, or $12.62 per share, down from $125.9 million, or $13.26, a year earlier. The petroleum-additives segment, the bulk of the company, saw sales decline to $609.8 million from $645.6 million on a 7% drop in shipments tied to market softness, mainly in lubricant additives. The specialty-materials (AMPAC) segment grew to $58.1 million from $53.7 million, helped by the Calca Solutions business acquired October 1, 2025.

The forward catalysts are the recovery (or continued softness) in additive shipment volumes and the ramp of the specialty-materials and defense-related business. The integration and growth of AMPAC and Calca in aerospace and defense materials is the clearest source of incremental growth outside the mature additives core, and bolt-on acquisitions funded from cash are part of NewMarket's pattern.

The watch items are lubricant and fuel additive demand trends, the pace of the EV transition as a long-term headwind to engine-oil additives, raw-material costs and pricing, and capital allocation between buybacks, dividends, and acquisitions. A stabilization or rebound in additive shipments alongside continued AMPAC growth would support the view that the price underrates a durable franchise; continued volume declines would validate the concern about a structural fade. Sources: NewMarket Q1 2026 results (newmarket.com; stocktitan.net; businesswire.com), April 2026.

Peer Cohorts (Per Segment, With Filing Citations)

Petroleum additives (reported)

Specialty materials (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive NEU report on boothcheck