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Why You Should Retain Eastman Chemical (EMN) in Your Portfolio
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Eastman Chemical Company (EMN - Free Report) is benefiting from cost-cutting and productivity actions as well as its innovation-driven growth model amid certain headwinds including higher raw material costs.
Shares of this leading chemical maker are up 8.2% over the past six months compared with the 5.4% rise of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding EMN?
Eastman Chemical is gaining from its actions to manage costs. It is undertaking a more aggressive approach to keep manufacturing costs in control. The company’s cost actions are expected to contribute to its earnings per share in 2022. Eastman Chemical is expected to benefit from lower operating costs from its operational transformation program and lower manufacturing shutdowns this year. It expects lower manufacturing and maintenance costs in 2022.
The company is also focused on generating new business revenues from innovation. Eastman Chemical generated roughly $600 million of new business revenues from innovation in 2021, driven by the strength in its specialty products. The company expects its specialty portfolio to drive sales growth across major markets such as consumer durables, building & construction, and transportation in 2022. Eastman Chemical will also likely gain from its strategic acquisitions and end-market recovery.
Eastman Chemical is also committed toward maintaining a disciplined approach to capital allocation, with an emphasis on financing its dividend and debt reduction. The company returned $1.4 billion to shareholders through share repurchases and dividends during 2021. Eastman Chemical also repaid $350 million of debt in 2021. It expects to generate operating cash flow of more than $1.6 billion in 2022.
A Few Worries
Eastman Chemical faces headwinds from higher raw material, energy and distribution costs in some of its products. It saw significant headwinds from higher raw material, energy and distribution costs in the fourth quarter of 2021. The company expects these costs in 2022 to remain at the levels witnessed in fourth-quarter 2021.
The company is also exposed to headwinds from supply-chain disruptions, partly associated with the pandemic. The Omicron variant has created more supply chain disruptions. The company witnessed unfavorable impacts from supply chain constraints and higher logistics costs in the fourth quarter. Headwinds associated with supply and logistics are likely to continue to impact its first-quarter 2022 results.
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 37.8% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 60.3%, on average. NTR has rallied around 87% in a year.
AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 64.9% for the current year. ASIX's consensus estimate for current-year earnings has been revised 53% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 90% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 114.7% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 35.1% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.7%, on average. CMC has gained around 34% in a year.
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Why You Should Retain Eastman Chemical (EMN) in Your Portfolio
Eastman Chemical Company (EMN - Free Report) is benefiting from cost-cutting and productivity actions as well as its innovation-driven growth model amid certain headwinds including higher raw material costs.
Shares of this leading chemical maker are up 8.2% over the past six months compared with the 5.4% rise of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Aiding EMN?
Eastman Chemical is gaining from its actions to manage costs. It is undertaking a more aggressive approach to keep manufacturing costs in control. The company’s cost actions are expected to contribute to its earnings per share in 2022. Eastman Chemical is expected to benefit from lower operating costs from its operational transformation program and lower manufacturing shutdowns this year. It expects lower manufacturing and maintenance costs in 2022.
The company is also focused on generating new business revenues from innovation. Eastman Chemical generated roughly $600 million of new business revenues from innovation in 2021, driven by the strength in its specialty products. The company expects its specialty portfolio to drive sales growth across major markets such as consumer durables, building & construction, and transportation in 2022. Eastman Chemical will also likely gain from its strategic acquisitions and end-market recovery.
Eastman Chemical is also committed toward maintaining a disciplined approach to capital allocation, with an emphasis on financing its dividend and debt reduction. The company returned $1.4 billion to shareholders through share repurchases and dividends during 2021. Eastman Chemical also repaid $350 million of debt in 2021. It expects to generate operating cash flow of more than $1.6 billion in 2022.
A Few Worries
Eastman Chemical faces headwinds from higher raw material, energy and distribution costs in some of its products. It saw significant headwinds from higher raw material, energy and distribution costs in the fourth quarter of 2021. The company expects these costs in 2022 to remain at the levels witnessed in fourth-quarter 2021.
The company is also exposed to headwinds from supply-chain disruptions, partly associated with the pandemic. The Omicron variant has created more supply chain disruptions. The company witnessed unfavorable impacts from supply chain constraints and higher logistics costs in the fourth quarter. Headwinds associated with supply and logistics are likely to continue to impact its first-quarter 2022 results.
Eastman Chemical Company Price and Consensus
Eastman Chemical Company price-consensus-chart | Eastman Chemical Company Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 37.8% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 60.3%, on average. NTR has rallied around 87% in a year.
AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 64.9% for the current year. ASIX's consensus estimate for current-year earnings has been revised 53% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 90% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 114.7% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 35.1% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.7%, on average. CMC has gained around 34% in a year.