Eastman Chemical Company (EMN - Free Report) is set to release second-quarter 2020 results after the closing bell on Aug 3. The company’s earnings are likely to have benefited from its cost management actions. However, weak demand due to the coronavirus pandemic might have impacted its performance in the quarter.
Eastman Chemical beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice. For this timeframe, the company delivered an earnings surprise of roughly 4.4%, on average.
Shares of Eastman Chemical are up 2.7% over a year, compared with a 7% decline of its industry.
Let’s see how things are shaping up for this announcement.
Our proven model predicts an earnings beat for Eastman Chemical this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP: Earnings ESP for Eastman Chemical is +4.74%. The Zacks Consensus Estimate for earnings the second quarter is currently pegged at $1.03. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Eastman Chemical currently carries a Zacks Rank #3.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for Eastman Chemical for the second quarter is currently pinned at $1,775 million, indicating a 24.9% year-over-year decline.
Moreover, the Zacks Consensus Estimate for Eastman Chemical’s Additives and Functional Products division revenues is pegged at $619 million, suggesting a 24.8% decline year over year. The consensus estimate for Advanced Materials unit’s revenues is $566 million, indicating a fall of 18.7% year over year.
The Zacks Consensus Estimate for the Chemical Intermediates segment’s revenues stands at $460 million, indicating a 27.1% decline from the year-ago quarter. The same for the Fibers segment is pegged at $199 million, calling for a 6.6% year-over-year decline.
Factors to Watch For
Eastman Chemical is focused on productivity and cost-cutting actions in the wake of a challenging environment. The company is taking an aggressive approach to cost management in response to the coronavirus pandemic. It has significantly increased its cost reduction target, which is forecast to be roughly $150 million of net savings in 2020.
Benefits of cost actions are expected to get reflected on second-quarter results. Moreover, the company’s actions to raise selling prices of its products are likely to have contributed to its bottom line in the quarter.
Eastman Chemical is also focused on growing new business revenues from innovation. It expects to generate roughly $500 million of new business revenues in 2020. The company is likely to have gained from growth in high-margin innovation products in the second quarter.
However, Eastman Chemical is seeing weaker demand across certain markets due to coronavirus. Lower demand across transportation, textiles and energy markets might have affected the company’s sales volumes in the second quarter.
Moreover, costs associated with idling of a number of facilities and reduction of operating rates due to the pandemic are likely have weighed on the company’s bottom line in the quarter to be reported.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
FMC Corporation (FMC - Free Report) , slated to release earnings on Aug 4, has an Earnings ESP of +1.13% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pan American Silver Corp. (PAAS - Free Report) , slated to release earnings on Aug 5, has an Earnings ESP of +23.81% and carries a Zacks Rank #3.
Barrick Gold Corporation (GOLD - Free Report) , scheduled to release earnings on Aug 10, has an Earnings ESP of +0.54% and carries a Zacks Rank #3.
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