NewMarket combines a sticky petroleum-additives cash engine with a domestic defense-chemicals moat, while a $1,288.26 five-year probability-weighted target implies attractive long-term upside.
Overview
NewMarket Corporation (NEU) is a global specialty-chemicals holding company whose Petroleum Additives business supplies mission-critical lubricant and fuel formulations, while Specialty Materials supplies energetic chemicals for defense and space. Afton is the third-largest global lubricant-additives provider with an estimated 13.8% share, and its multi-year OEM certification requirements create high switching costs. The acquired AMPAC and Calca assets add a powerful domestic defense moat: AMPAC is the only approved domestic supplier of Grade 1 ammonium perchlorate, while Calca has served the DoD’s Defense Logistics Agency-Energy for more than 70 years. **Financial momentum is accelerating:** Q2 2026 sales rose 7.0% to $747.1 million, net income increased 20.3% to $133.8 million, and diluted EPS rose 22.8% to $14.54. Specialty Materials sales increased 59.5% to $67.2 million and operating profit rose 112.4% to $22.3 million. **Valuation remains supportive:** at $937.34, NEU trades at 20.17x normalized P/E and 12.38x EV/EBITDA, below chemical averages and peers, while DCF estimates fair value at $1,354-$1,357. Near-term catalysts include late-2026 capacity additions, continued defense spending, buybacks, and the $3.00 quarterly dividend.