Quaker Chemical (KWR) AI Stock Analysis

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Quaker Chemical

(NYSE:KWR)

65Neutral

Quaker Chemical's overall score reflects its solid financial management and strategic resilience in challenging markets. While the technical indicators point to a bearish trend, the company's stable profitability, effective cost management, and strategic market expansions offer a balanced growth outlook. The valuation metrics support a fair market price, and the guidance from the latest earnings call is optimistic, despite current market headwinds.

Quaker Chemical (KWR) vs. S&P 500 (SPY)

Market Cap

$1.83B

Dividend Yield1.82%

Average Volume (3M)190.17K

Price to Earnings (P/E)15.9

Beta (1Y)1.29

Revenue Growth-5.82%

EPS Growth3.75%

CountryUS

Employees4,400

SectorBasic Materials

Sector Strength58

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)6.50

Shares Outstanding17,670,916

10 Day Avg. Volume205,726

30 Day Avg. Volume190,169

Financial Highlights & Ratios

PEG Ratio4.25

Price to Book (P/B)N/A

Price to Sales (P/S)1.24

Price to Cash Flow (P/CF)9.10

P/FCF Ratio7.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$136.33

Price Target Upside29.04% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Quaker Chemical Business Overview & Revenue Model

Company DescriptionQuaker Chemical Corporation develops, produces, and markets various formulated chemical specialty products for a range of heavy industrial and manufacturing applications. The company operates through four segments: Americas; Europe, Middle East, and Africa; Asia/Pacific; and Global Specialty Businesses. It offers metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, specialty greases, metal finishing fluids, offshore sub-sea energy control fluids, rolling lubricants, rod and wire drawing fluids, and surface treatment chemicals. The company also provides chemical management services. It serves steel, aluminum, automotive, aerospace, offshore, can, mining, and metalworking companies. The company was formerly known as Quaker Chemical Products Corporation and changed its name to Quaker Chemical Corporation in August 1962. Quaker Chemical Corporation was founded in 1918 and is headquartered in Conshohocken, Pennsylvania.

How the Company Makes MoneyQuaker Chemical generates revenue primarily through the sale of its specialized chemical products and services to a variety of industrial sectors. The company offers tailored solutions that enhance manufacturing processes and equipment performance, which are critical to its clients' operations. Revenue streams include the direct sale of high-performance fluids and chemical solutions, as well as service agreements for technical support and process optimization. Quaker Chemical's earnings are bolstered by strategic partnerships and long-term contracts with major industrial players, ensuring a steady demand for its customized solutions. The company's global presence and commitment to innovation further support its financial performance by allowing it to leverage emerging market opportunities and address evolving customer needs.

Quaker Chemical Financial Statement Overview

Summary

Quaker Chemical maintains a solid financial position with stable profitability and efficient operational performance. Despite a recent drop in revenue and operating cash flow, the company effectively manages its balance sheet with moderate leverage and strong equity ratios.

Income Statement

Positive

Quaker Chemical shows a stable income statement with a consistent gross profit margin averaging around 35% over the years. The recent net profit margin slightly increased to 6.3% from 5.8% in the previous year, indicating improved profitability, although revenue has decreased by 5.8% in the last year. The EBIT and EBITDA margins demonstrate strong operational efficiency, with EBIT at 10.6% and EBITDA at 10.6% for the current year.

Balance Sheet

Positive

The company's balance sheet is relatively stable, with a debt-to-equity ratio around 0.54, suggesting moderate leverage. Return on Equity (ROE) shows improvement, rising to 8.6% from 8.1%, indicating effective use of equity to generate profits. The equity ratio is slightly over 50%, reflecting a balanced financial structure with a good proportion of assets financed by equity.

Cash Flow

Positive

Quaker Chemical's cash flow statement indicates a decrease in operating cash flow from $279 million to $204 million, suggesting challenges in cash generation. However, the free cash flow remains strong, with a slight decrease from $240 million to $215 million. The operating cash flow to net income ratio is healthy, indicating that cash flow from operations is adequately supporting net income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.84B	1.95B	1.94B	1.76B	1.42B
	Gross Profit
686.03M	705.64M	612.65M	594.64M	513.44M
	EBIT
194.71M	214.50M	144.64M	150.47M	127.07M
	EBITDA
194.71M	290.11M	239.42M	253.22M	138.74M
	Net Income Common Stockholders
116.64M	112.75M	-17.81M	121.37M	39.66M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
188.88M	194.53M	180.96M	165.18M	181.83M
	Total Assets
2.61B	2.71B	2.82B	2.96B	2.89B
	Total Debt
727.20M	788.97M	979.77M	919.68M	915.11M
	Net Debt
538.32M	594.44M	798.81M	754.51M	733.27M
	Total Liabilities
1.26B	1.33B	1.54B	1.57B	1.57B
	Stockholders Equity
1.35B	1.38B	1.28B	1.39B	1.32B
Cash Flow		Free Cash Flow
215.86M	240.22M	13.26M	27.48M	160.49M
	Operating Cash Flow
204.58M	279.02M	41.79M	48.93M	178.39M
	Investing Cash Flow
-76.42M	-27.62M	-40.19M	-49.13M	-71.39M
	Financing Cash Flow
-122.66M	-238.61M	24.67M	-13.46M	-75.25M

Quaker Chemical Technical Analysis

Technical Analysis Sentiment

Negative

Last Price105.65

Price Trends

50DMA

124.72

Negative

100DMA

133.04

Negative

200DMA

148.85

Negative

Market Momentum

MACD

-6.65

Negative

RSI

40.77

Neutral

STOCH

52.01

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KWR, the sentiment is Negative. The current price of 105.65 is below the 20-day moving average (MA) of 109.00, below the 50-day MA of 124.72, and below the 200-day MA of 148.85, indicating a bearish trend. The MACD of -6.65 indicates Negative momentum. The RSI at 40.77 is Neutral, neither overbought nor oversold. The STOCH value of 52.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KWR.

Quaker Chemical Risk Analysis

Quaker Chemical disclosed 28 risk factors in its most recent earnings report. Quaker Chemical reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Quaker Chemical Peers Comparison

Overall Rating

UnderperformOutperform

Sector (49)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IOSP	67 Neutral	$2.27B	63.74	3.02%	1.75%	-5.31%	-74.42%
MTX	66 Neutral	$1.87B	11.37	9.83%	0.73%	-2.37%	100.91%
KWR	65 Neutral	$1.83B	15.93	8.49%	1.82%	-5.82%	3.75%
CC	56 Neutral	$1.80B	21.06	12.98%	8.45%	-4.05%	―
PRM	55 Neutral	$1.52B	―	-0.51%	―	74.16%	-112.26%
Sector *	49 Neutral	$1.96B	-1.42	-21.96%	3.81%	0.71%	-27.38%
SSL	47 Neutral	$2.21B	―	-28.05%	2.00%	-4.31%	-1421.83%

* Basic Materials Sector Average

Performance Comparison

KWR

Quaker Chemical

105.65

-79.22

-42.85%

IOSP

Innospec

90.33

-28.28

-23.84%

MTX

Minerals Technologies

58.80

-11.99

-16.94%

SSL

Sasol

3.50

-3.36

-48.98%

Chemours Company

12.44

-13.22

-51.52%

PRM

Perimeter Solutions

10.25

3.28

47.06%

Quaker Chemical Earnings Call Summary

Earnings Call Date: Feb 24, 2025 | % Change Since: -24.58% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Neutral

Quaker Houghton demonstrated resilience and strategic focus in a challenging market environment, with stable volumes and strong cash flow supporting growth initiatives. However, the decline in sales and gross margins, particularly in the EMEA and Americas segments, highlights ongoing market challenges. The company's strategic actions and long-term growth outlook provide a positive counterbalance to current market headwinds.

Highlights

Stable Performance in Challenging Markets

Despite a 5% decline in net sales to $444 million in Q4, Quaker Houghton's volumes were consistent due to market share gains. The company outperformed challenging end markets with stable volumes over nine quarters.

Strong Cash Flow and Capital Allocation

In 2024, Quaker Houghton generated $205 million in operating cash flow, enabling investments in organic growth, increased dividends, debt repayment, two acquisitions, and $50 million in share repurchases.

Strategic Expansion and Globalization

Quaker Houghton expanded its market presence with investments in regions like India, Southeast Asia, and China. The acquisition of Chemical Solutions & Innovations in South Africa supports growth in emerging geographies.

Cost Management and Operational Efficiency

Identified $20 million of cost actions expected to drive $15 million of savings in 2025, along with ongoing procurement and manufacturing improvements.

Positive Long-term Outlook

End markets expected to grow 1% to 2% in 2025, driven by increased production at new steel and aluminum mills, with expected revenue, adjusted EBITDA, and earnings growth.

Lowlights

Revenue Decline and Currency Impact

Net sales declined by 5% in Q4, with a 2% unfavorable impact from foreign exchange. Selling price and product mix were 4% lower due to index-based contracts and product mix changes.

Gross Margin Challenges

Gross margins fell to 35.2% in Q4, impacted by manufacturing absorption, raw material cost increases, and product mix shifts, particularly in the Americas and EMEA.

Weakness in EMEA and Americas Segments

EMEA and Americas segments saw a decline in net sales by 7% and 8% respectively, due to lower selling prices, product mix, foreign exchange, and sales volumes.

Market and Economic Uncertainty

End market conditions weakened further in 2024, with softness in industrial and automotive applications, creating a challenging environment for growth.

Company Guidance

In the recent earnings call, Quaker Houghton provided guidance reflecting a challenging but optimistic outlook for 2025. The company reported fourth-quarter net sales of $444 million, representing a 5% decline from the previous year, or 3% on a constant currency basis. Despite these declines, Quaker Houghton maintained stable volumes due to market share gains, driven by their targeted 2% to 4% range of net new business wins. Gross margins were reported at 35.2% for the quarter, impacted by factors such as manufacturing absorption and raw material cost increases, with expectations of sequential improvement in the first quarter of 2025. The company generated $65 million in adjusted EBITDA for the fourth quarter and $311 million for the full year, alongside $205 million in operating cash flow. Looking forward, Quaker Houghton anticipates a modest 1% to 2% growth in end markets in 2025, with revenue, adjusted EBITDA, and earnings growth expected as macroeconomic conditions improve, particularly in the second half of the year. The company also plans to implement $20 million in cost actions, with $15 million of in-year savings anticipated.

Quaker Chemical Corporate Events

Executive/Board Changes

Quaker Chemical Grants Long-Term Incentive Awards

Neutral

Dec 17, 2024

Quaker Chemical Corporation’s Compensation and Human Resources Committee has granted long-term incentive equity compensation awards to its executives, Tom Coler and Jeewat Bijlani, in the form of restricted stock units (RSUs) under its Long-Term Performance Incentive Plan. These RSUs are subject to a performance modifier based on the company’s total shareholder return relative to the S&P 1500 Chemicals Index, with vesting adjustments ranging from 75% to 125% of the target number, depending on performance over a three-year period.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.