Is NewMarket (NEU) Undervalued After Strong Second Quarter Earnings?

Why NewMarket earnings and buybacks matter for shareholders now

NewMarket (NEU) just released second quarter 2026 results alongside a buyback progress update, providing fresh data on profitability, cash deployment, and how management is handling capital returns.

The company reported second quarter sales of US$747.09 million and net income of US$133.75 million, with basic earnings per share from continuing operations of US$14.54. These figures sit alongside a completed multi year repurchase program.

See our latest analysis for NewMarket.

NewMarket's latest earnings update appears to have arrived during a strong run for the stock, with a 30 day share price return of 16.47% and a 90 day share price return of 29.65% helping extend a 5 year total shareholder return of 188.61%.

If this earnings driven move has you thinking about what else is working in adjacent areas of the market, it may be worth scanning 37 power grid technology and infrastructure stocks.

NewMarket recently reported higher earnings alongside a strong multiyear shareholder return record and a completed buyback. The business appears solid. The next question is whether the current share price still offers value.

Preferred P/E multiple of 19x, is it justified for NewMarket?

NewMarket is currently trading at a P/E of 19x, which sits below both the US Chemicals industry average of 29.7x and a peer average of 35.1x. At a last close of $889.71, that gap suggests the market is assigning a lower price to each dollar of earnings compared with many competitors.

The P/E ratio compares the current share price to earnings per share. For a mature, profitable business like NewMarket, it gives a quick read on how the market is weighing its earnings power against other chemicals stocks. A lower P/E can sometimes reflect concerns about growth, balance sheet strength, or cyclicality, but it can also point to a potential valuation discount if earnings quality is solid.

In NewMarket's case, several data points sit alongside that 19x P/E. Return on equity is described as high at 23.6%. Earnings have grown on average by 16.2% per year over the past 5 years, even though profit margins most recently moved from 17.2% to 15.7% and earnings declined 9.8% over the last year. The company also carries a high level of debt and relies entirely on external borrowing, which may be part of what keeps the multiple below peers.

Compared with the wider US Chemicals industry P/E of 29.7x and a peer average of 35.1x, NewMarket's 19x looks materially lower. That is a sizeable gap, and the data suggests the market is pricing its earnings at a discount to many competitors despite high reported return on equity and a history of multi year earnings growth.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-earnings of 19x (UNDERVALUED)

However, NewMarket still faces risks from its high reliance on debt funding and exposure to global petroleum demand, which could pressure earnings and the current valuation narrative.

Find out about the key risks to this NewMarket narrative.

Another view on NewMarket using the SWS DCF model

The earlier P/E comparison presents NewMarket as inexpensive next to the US Chemicals industry. Our DCF model offers a similar perspective in a different way. With an estimated value of $1,346.39 per share versus a current price of $889.71, it suggests that NewMarket is trading at a clear discount. The question for you is whether that gap reflects opportunity or risk in the cash flow assumptions.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NewMarket for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mix of positives and concerns around NewMarket, it makes sense to review the underlying numbers yourself and decide how comfortable you are with the balance of risks and rewards. To help frame that view, take a closer look at the 2 key rewards and 1 important warning sign.

Looking for more investment ideas beyond NewMarket?

If NewMarket has sharpened your focus, do not stop here. Broaden your watchlist now so you are not the one hearing about strong ideas after the move.

• Target dependable income streams by reviewing companies that appear in the 8 dividend fortresses for potential high yielding, resilient payers.
• Hunt for quality at a price that still looks reasonable by scanning the screener containing 21 high quality undiscovered gems before the crowd catches on.
• Prioritise capital protection by focusing on companies highlighted in the 83 resilient stocks with low risk scores that score well on resilience and downside control.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com