We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why You Should Retain Eastman Chemical (EMN) in Your Portfolio
Read MoreHide Full Article
Eastman Chemical Company (EMN - Free Report) is gaining from cost-cutting and productivity actions as well as its innovation-driven growth model. However, it is exposed to certain headwinds, including soft demand and consumer de-stocking.
Shares of this leading chemical maker are down 0.3% over the past year compared with the 11.7% decline 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.
Cost Cuts and Innovation Aid EMN
Eastman is benefiting from its actions to manage costs. The company is expected to gain from lower operating costs from its operational transformation program.
EMN was able to offset $1.3 billion in inflation from higher raw material, energy and distribution costs through price increases in 2022. It is on track to reduce manufacturing, supply chain and non-manufacturing costs by more than $200 million for 2023, net of inflation. Pricing initiatives and lower raw material and energy costs are also expected to support the company’s bottom line.
Moreover, Eastman's goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Due to the company's competence in specialty products, it generated around $550 million in new business revenues from innovation in 2022. Sales volumes are expected to be supported by the innovation and market development initiatives.
Eastman Chemical also remains focused on maintaining a disciplined approach to capital allocation. Its operating cash flow more than doubled year over year to $514 million in the third quarter of 2023. The company returned $94 million to shareholders in the third quarter through dividends and share repurchases. Furthermore, it expects to deliver $1.4 billion in operating cash flow in 2023.
Soft Demand Remains a Concern
Lingering effects from customer inventory de-stocking are expected to adversely impact Eastman Chemical’s performance. The company saw soft demand and consumer de-stocking for its consumer durables, building & construction, agriculture, medical and consumables end markets in the third quarter of 2023. The impacts of de-stocking are likely to be felt on the company’s volumes and top line in the fourth quarter.
The company, in its third-quarter call, said that it is seeing muted demand heading into the fourth quarter as customers are cautious in the prevailing challenging environment. In addition, it anticipates regular seasonality in key end markets, including building and construction, consumer durables and performance films for automotive applications.
Higher pension costs and lower capacity utilization are also expected to hurt company’s bottom line in 2023. EMN expects pension and other post-employment benefits headwind of around $110 million for 2023. The company also sees a headwind of roughly $100 million due to lower asset utilization to reduce inventory in second-half 2023 compared with the first half.
Better-ranked stocks worth a look in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. DNN has a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 72% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current year has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 22% in the past year.
Andersons currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 5.1% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied roughly 47% in a year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why You Should Retain Eastman Chemical (EMN) in Your Portfolio
Eastman Chemical Company (EMN - Free Report) is gaining from cost-cutting and productivity actions as well as its innovation-driven growth model. However, it is exposed to certain headwinds, including soft demand and consumer de-stocking.
Shares of this leading chemical maker are down 0.3% over the past year compared with the 11.7% decline 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.
Cost Cuts and Innovation Aid EMN
Eastman is benefiting from its actions to manage costs. The company is expected to gain from lower operating costs from its operational transformation program.
EMN was able to offset $1.3 billion in inflation from higher raw material, energy and distribution costs through price increases in 2022. It is on track to reduce manufacturing, supply chain and non-manufacturing costs by more than $200 million for 2023, net of inflation. Pricing initiatives and lower raw material and energy costs are also expected to support the company’s bottom line.
Moreover, Eastman's goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Due to the company's competence in specialty products, it generated around $550 million in new business revenues from innovation in 2022. Sales volumes are expected to be supported by the innovation and market development initiatives.
Eastman Chemical also remains focused on maintaining a disciplined approach to capital allocation. Its operating cash flow more than doubled year over year to $514 million in the third quarter of 2023. The company returned $94 million to shareholders in the third quarter through dividends and share repurchases. Furthermore, it expects to deliver $1.4 billion in operating cash flow in 2023.
Soft Demand Remains a Concern
Lingering effects from customer inventory de-stocking are expected to adversely impact Eastman Chemical’s performance. The company saw soft demand and consumer de-stocking for its consumer durables, building & construction, agriculture, medical and consumables end markets in the third quarter of 2023. The impacts of de-stocking are likely to be felt on the company’s volumes and top line in the fourth quarter.
The company, in its third-quarter call, said that it is seeing muted demand heading into the fourth quarter as customers are cautious in the prevailing challenging environment. In addition, it anticipates regular seasonality in key end markets, including building and construction, consumer durables and performance films for automotive applications.
Higher pension costs and lower capacity utilization are also expected to hurt company’s bottom line in 2023. EMN expects pension and other post-employment benefits headwind of around $110 million for 2023. The company also sees a headwind of roughly $100 million due to lower asset utilization to reduce inventory in second-half 2023 compared with the first half.
Eastman Chemical Company Price and Consensus
Eastman Chemical Company price-consensus-chart | Eastman Chemical Company Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. DNN has a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 72% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current year has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 22% in the past year.
Andersons currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 5.1% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied roughly 47% in a year.