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Eastman Chemical (EMN) Up 22% in 3 Months: What's Driving It?

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Eastman Chemical Company’s (EMN - Free Report) shares are up 21.7% over the past three months. The company has also topped its industry’s rise of 15.5% over the same time frame.

The chemical maker has a market cap of roughly $11.6 billion and average volume of shares traded in the last three months is around 982.9K.


 

Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

What’s Aiding the Stock?

Eastman Chemical is benefiting from its innovation-driven growth model, cost-management actions and acquisitions.

The company is taking an aggressive approach to cost management in the wake of the coronavirus pandemic. It has significantly increased its cost-reduction target, which is forecast to be roughly $150 million of net savings in 2020. These cost initiatives include reduction of discretionary spending. The company’s cost reduction actions are expected to contribute to its earnings in 2020.

Eastman Chemical also remains focused on growing new business revenues from innovation. In particular, the company’s Advanced Materials segment has a number of products that are driving new business revenues.

Moreover, the company is benefiting from synergies of acquisitions. The acquisition of Marlotherm heat transfer fluids manufacturing assets in Germany has allowed the company to boost its heat transfer fluids product offerings to customers globally. Moreover, the acquisition of Spain-based cellulosic yarn producer, INACSA reinforces the growth of the company’s textiles innovation products like Naia cellulosic yarn.

Eastman Chemical also remains committed to maintain a disciplined approach to capital allocation, with an emphasis on financing its dividend and debt reduction. It expects to reduce net debt by more than $600 million in 2020. The company is also taking actions to boost its cash flows. These include reduction of capital expenditure. It expects to generate more than $1 billion of free cash flow this year.

Earnings estimate revisions also have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for Eastman Chemical for the current year has increased 2.7%. The consensus estimate for 2021 has also been revised 2.2% upward over the same time frame.

 

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Yamana Gold Inc. and Eldorado Gold Corporation (EGO - Free Report) .

Agnico Eagle has a projected earnings growth rate of 91.8% for the current year. The company’s shares have rallied around 43% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Yamana Gold has an expected earnings growth rate of 84.6% for the current year. The company’s shares have surged around 73% in the past year. It currently carries a Zacks Rank #2 (Buy).

Eldorado Gold has a projected earnings growth rate of 2,325% for the current year. The company’s shares have shot up roughly 43% in a year. It currently carries a Zacks Rank #2.

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