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What's in Store for Eastman Chemical (EMN) in Q4 Earnings?

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Eastman Chemical Company (EMN - Free Report) is set to release fourth-quarter 2020 results after the closing bell on Jan 28. The company’s earnings are likely to have benefited from its cost-management actions and a recovery in demand from coronavirus-induced slowdown.

Eastman Chemical beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. For this timeframe, the company delivered an earnings surprise of 4.9%, on average.

Shares of Eastman Chemical are up 39.5% over a year, outperforming the 22.5% rise of its industry.

 


 

 

Let’s see how things are shaping up for this announcement.

Zacks Model

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 +16.17%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $1.52. 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 #2.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Eastman Chemical for the fourth quarter is currently pinned at $2,146 million, indicating a 2.7% year-over-year decline.

Moreover, the Zacks Consensus Estimate for Eastman Chemical’s Additives and Functional Products division revenues is pegged at $744 million, suggesting a 2.5% decline year over year. The consensus estimate for Advanced Materials unit’s revenues is $630 million, indicating a fall of 1.3% year over year.

The Zacks Consensus Estimate for the Chemical Intermediates segment’s revenues stands at $527 million, indicating an 8.8% decline from the year-ago quarter. The same for the Fibers segment is pegged at $215 million, calling for a 4.9% year-over-year decline.

Factors to Watch For

Benefits of the company’s cost-management actions are expected to get reflected on fourth-quarter results. Eastman Chemical is taking an aggressive approach to cost management in the wake of the pandemic. It expects to deliver roughly $150 million of cost savings for full-year 2020 with around $40 million anticipated in the fourth quarter. Cost actions are expected to have contributed to its bottom line in the quarter to be reported.

Moreover, an improved demand environment is also likely to have aided the company’s performance. Eastman Chemical is seeing a recovery across building & construction, tires, automotive and consumer durables markets. In the third quarter of 2020, it witnessed improved demand in its end markets, especially those that are worst hit by the pandemic. The momentum is expected to have continued in the fourth quarter.

Eastman Chemical is also focused on growing new business revenues from innovation. The company is likely to have gained from growth in high-margin innovation products in the fourth quarter.
    
However, demand weakness in certain markets including textiles might have affected the company’s sales volumes in the fourth quarter. Soft demand for textiles products due to coronavirus is hurting the Fibers unit. Weak selling prices are also likely to have impacted revenues and margins in the Chemical Intermediates segment in the December quarter.

 

Eastman Chemical Company Price and EPS Surprise

 

Eastman Chemical Company Price and EPS Surprise

Eastman Chemical Company price-eps-surprise | Eastman Chemical Company Quote

 

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

LyondellBasell Industries N.V. (LYB - Free Report) , scheduled to release earnings on Jan 29, has an Earnings ESP of +10.12% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese Corporation (CE - Free Report) , scheduled to release earnings on Jan 28, has an Earnings ESP of +2.38% and carries a Zacks Rank #2.

FMC Corporation (FMC - Free Report) , scheduled to release earnings on Feb 9, has an Earnings ESP of +2.37% and carries a Zacks Rank #2.

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