NewMarket: Now Trading At A 10% Free Cash Flow Yield

(7min)

Summary

  • NewMarket's 2024 performance exceeded expectations with strong petroleum additives results, reducing net debt significantly post-AMPAC acquisition.
  • Full-year operating profit rose by 19%, net profit increased to $462M, and EPS jumped to $48.22.
  • The company generated robust free cash flow of $492M, aiding rapid debt reduction. Net debt to EBITDA ratio improved to less than 1.2.
  • Management anticipates continued strength in petroleum additives and specialty materials segments, aiming to slash net debt below $500M by year-end 2025.
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Grease lithium machinery lubrication for automotive and industrial.

manassanant pamai/iStock via Getty Images

Introduction

NewMarket (NYSE:NEU) is a holding company, and as explained in a previous article, the company owns Afton Chemical, which produces petroleum additives (including fuel additives and lubricants) while another subsidiary, Ethyl Corp., produces antiknock compounds primarily used in the automotive industry. These

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The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

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Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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