Quaker Chemical Corp. – Value Analysis (NYSE:KWR) : May 23, 2017

Capitalcube gives Quaker Chemical Corp. a score of 66.

Our analysis is based on comparing Quaker Chemical Corp. with the following peers – WD-40 Company, Aceto Corporation, Innophos Holdings, Inc., Chase Corporation, Northern Technologies International Corporation and Hawkins, Inc. (WDFC-US, ACET-US, IPHS-US, CCF-US, NTIC-US and HWKN-US).

Investment Outlook

Quaker Chemical Corp. has a fundamental score of 66 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • It currently trades at a Price/Book ratio of (4.36).
  • The market expects KWR-US to grow faster than its peers and for the company to improve its current ROE.
  • KWR-US‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • KWR-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While KWR-US‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • KWR-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

KWR-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 3.82% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 9.29%), and a well-cushioned interest coverage level of 32.43x, KWR-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 6 chosen peers for the company, only 5 of the stocks have an outstanding debt balance. Companies with no debt include NTIC-US.

KWR-US has maintained its Quick & Able profile from the recent year-end.

  • KWR-US‘s interest coverage is greater than (but within one standard deviation of) its five-year average interest coverage of 27.02x.
  • While its interest coverage increased to 32.43x from 29.11x (in 2016), its peer median decreased during this period to 14.77x from 29.11x.
  • Interest coverage rose 17.66 points relative to peers.
  • KWR-US‘s debt-EV continues to trend downward and is below (but within one standard deviation of) its five-year average debt-EV of 4.86%.
  • Though its debt-EV has remained relatively stable at 3.82% compared to 2016, its peer median has increased to 9.29% from 7.65% during this period.
  • Relative to peers, debt-EV fell 1.76 percentage points.

Access the detailed analysis for Quaker Chemical Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
WD-40 Company 9.29 3.18 34.1 42.5
Aceto Corporation 47.04 2.07 3.58 13.1
Innophos Holdings, Inc. 15.62 3.27 10.15 52.06
Chase Corporation 2.98 5.03 50.44 144.69
Northern Technologies International Corporation 0 4.1 -391.29 999
Hawkins, Inc. 16.72 2.79 14.77 41.78
Quaker Chemical Corporation 3.82 2.84 32.43 127.45
Peer Median 9.29 3.18 14.77 52.06
Best In Class 2.98 5.03 50.44 999

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Company Profile

Quaker Chemical Corp. engages in the business of developing, producing and marketing formulated chemical specialty products. It provides process fluids, chemical specialties, and technical expertise to a range of industries, including steel, aluminum, automotive, mining, aerospace, tube and pipe, cans, and others. The company was founded in 1918 and is headquartered in Conshohocken, PA.

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