Earnings estimates have been soaring for Stepan Company (SCL - Snapshot Report) following a big first quarter beat on April 28. This has sent the stock to a Zacks Rank #1 (Strong Buy).

While shares of Stepan have soared since the Q1 report, the stock still looks attractively priced with a Zacks Value Style Score of 'A'.

Company Description

Stepan Company produces specialty and intermediate chemicals, which are sold to other manufacturers and used in a variety of end products. The company has three reportable segments: Surfactants, Polymers and Specialty Products.

Surfactants (67% of revenue in 2014) are the basic cleaning agent in detergents for washing clothes, dishes, carpets, fine fabrics, floors and walls. They are also used in shampoos, body wash and conditioners, fabric softeners, toothpastes, cosmetics and other personal care products. Surfactants also have commercial and industrial applications, including emulsifiers for agricultural products, emulsion polymers such as floor polishes and latex foams and coatings, wetting and foaming agents for wallboard manufacturing and surfactants for enhanced oil recovery.

Polymers (29%) include two primary product lines - polyols and phthalic anhydride - and are used in multiple types of specialty polymers.

Specialty Products (4%) are chemicals used in food, flavoring, nutritional supplement and pharmaceutical applications.

First Quarter Results

Stepan delivered strong first quarter results on April 28. Adjusted earnings per share came in at $0.90, crushing the Zacks Consensus Estimate by 32%. It was a 61% increase over the same quarter last year.

Net sales actually slid 4% to $460.451 million, but this was due to a 6% foreign currency headwind. Net sales were also in-line with expectations. Surfactant and Polymer volume increased 2% and 5%, respectively.

Operating income in the Surfactants segment surged 84% year-over-year due to operational improvements, higher sales volumes, and favorable margins due in part to falling raw material costs.

Estimates Rising

Following strong Q1 results, management provided an encouraging outlook for the remainder of 2015, stating that "continued income growth in Polymers, an improved surfactant mix of end-use markets and products, successful execution of our efficiency initiative and benefits from falling petroleum-based raw material prices will have a favorable impact on full year results."

Analysts revised their estimates significantly higher after the report for both 2015 and 2016, sending the stock to a Zacks Rank #1 (Strong Buy).

The current 2015 Zacks Consensus Estimate is $3.46, up from $3.00 before the report. The 2016 consensus is now $3.88. up from $3.45 over the same period.

Based on these estimates, analysts are projecting 37% EPS growth this year and 12% growth next year.

Valuation & Yield

Shares of Stepan Company have soared since the Q1 report, but the valuation picture still looks very reasonable. The stock trades at less than 15x 12-month forward earnings and sports an enterprise value to cash flow ratio of less than 11.

The Zacks Value Style Score for Stepan is an 'A'.

Additionally, Stepan pays a dividend that yields 1.4%. The company has increased its dividend every year since 1968!

The Bottom Line

With improving underlying fundamentals, rising earnings estimates, strong growth projections and reasonable valuation, Stepan Company offers investors a lot to like.

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