We issued an updated research report on Eastman Chemical Company EMN
on Apr 4.
Eastman Chemical is poised to gain from cost-cutting and productivity initiatives, synergies of strategic acquisitions as well as efforts to reduce debt. It is also benefiting from strong growth of high-margin products in its specialty businesses.
Eastman Chemical’s shares has moved up 29.2% over a year, substantially outperforming the 7.5% gain of the industry
it belongs to. A better-than-expected fourth-quarter 2017 earnings and an upbeat 2018 outlook have contributed to the rally in Eastman Chemical’s shares.
In 2018, Eastman Chemical expects to drive growth on the back of growth investments, innovation and high margin products. It also sees modestly lower tax rate to support earnings growth. Eastman Chemical projects adjusted earnings per share growth in 2018 to be 8-12% year over year.
The company is focused on cost-cutting and productivity actions, which is helping it to offset raw material cost inflation and other cost headwinds. The company expects to realize $100 million of cost savings in 2018 under its cost-reduction program.
Eastman Chemical is also expected to gain from strategic acquisitions, especially of Taminco Corporation. The buyout has strengthened the company’s foothold in promising niche end-markets including food, feed and agriculture. The acquisition has also provided attractive cost and revenue synergy opportunities.
Further, the company is committed to reduce debt and boost shareholder returns leveraging strong free cash flows. The company repaid $350 million of debt last year. Moreover, it hiked quarterly dividend for the eighth consecutive year, returning more than $646 million to shareholders during 2017 leveraging healthy free cash flows. Eastman Chemical expects to deliver strong earnings growth and generate solid free cash flow of more than $1.1 billion in 2018.
Eastman Chemical Company Price and Consensus
Zacks Rank & Other Stocks to Consider
Eastman Chemical currently carries a Zacks Rank #2 (Buy).
LyondellBasell has an expected long-term earnings growth rate of 9%. The company’s shares have moved up 16.2% in a year.
Kronos has an expected long-term earnings growth rate of 5%. Its shares have gained 42.1% over a year.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have moved up 29.9% in a year.
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Eastman Chemical Company (EMN): Free Stock Analysis Report
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LyondellBasell Industries N.V. (LYB): Free Stock Analysis Report
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