We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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.
Shares of this leading chemical maker are down 0.3% over the past year compared with the 16.4% decline of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Image Source: Zacks Investment Research
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 is taking actions to keep its manufacturing and administrative costs in control. It achieved cost savings of around $200 million in 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. Its sales volumes are expected to be supported by the innovation and market development initiatives.
The company is also expected to gain from the revenues and earnings generated by its Kingsport methanolysis facility in 2024. The facility is expected to deliver roughly $75 million of incremental EBITDA growth in 2024.
Eastman Chemical also remains focused on maintaining a disciplined approach to capital allocation with an emphasis on debt reduction. It returned $526 million to shareholders in 2023 through dividends and share repurchases. Furthermore, the company delivered around $1.4 billion in operating cash flow in 2023. It also raised its dividend for the 14th consecutive year.
Soft Demand a Concern
The company saw soft demand and consumer de-stocking for its consumer durables, building & construction, agriculture, medical and consumables end markets in 2023. Lingering effects from customer inventory de-stocking in certain markets are expected to adversely impact its performance. EMN expects continued destocking in medical and agriculture in the first quarter of 2024. The impacts of de-stocking are likely to be felt on the company’s volumes and top line in the quarter. Soft demand in building & construction and consumer durables is also likely to continue over the near term.
Eastman Chemical faces headwinds from higher depreciation expenses due to its continued growth investments. The company sees a higher depreciation expense of $30 million this year related to its investments, including the Kingsport methanolysis facility and the new capacity for performance films in Germany and China. It also expects roughly $50 million of higher costs in 2024 associated with its investment in growth and capability development. Higher associated costs are likely to weigh on its margins.
Better-ranked stocks worth a look in the basic materials space include, Carpenter Technology Corporation (CRS - Free Report) , Alpha Metallurgical Resources Inc. (AMR - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 29% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. It currently carries a Zacks Rank #1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 152% in a year.
The consensus estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 64% in the past 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.
Shares of this leading chemical maker are down 0.3% over the past year compared with the 16.4% decline of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Image Source: Zacks Investment Research
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 is taking actions to keep its manufacturing and administrative costs in control. It achieved cost savings of around $200 million in 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. Its sales volumes are expected to be supported by the innovation and market development initiatives.
The company is also expected to gain from the revenues and earnings generated by its Kingsport methanolysis facility in 2024. The facility is expected to deliver roughly $75 million of incremental EBITDA growth in 2024.
Eastman Chemical also remains focused on maintaining a disciplined approach to capital allocation with an emphasis on debt reduction. It returned $526 million to shareholders in 2023 through dividends and share repurchases. Furthermore, the company delivered around $1.4 billion in operating cash flow in 2023. It also raised its dividend for the 14th consecutive year.
Soft Demand a Concern
The company saw soft demand and consumer de-stocking for its consumer durables, building & construction, agriculture, medical and consumables end markets in 2023. Lingering effects from customer inventory de-stocking in certain markets are expected to adversely impact its performance. EMN expects continued destocking in medical and agriculture in the first quarter of 2024. The impacts of de-stocking are likely to be felt on the company’s volumes and top line in the quarter. Soft demand in building & construction and consumer durables is also likely to continue over the near term.
Eastman Chemical faces headwinds from higher depreciation expenses due to its continued growth investments. The company sees a higher depreciation expense of $30 million this year related to its investments, including the Kingsport methanolysis facility and the new capacity for performance films in Germany and China. It also expects roughly $50 million of higher costs in 2024 associated with its investment in growth and capability development. Higher associated costs are likely to weigh on its margins.
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, Carpenter Technology Corporation (CRS - Free Report) , Alpha Metallurgical Resources Inc. (AMR - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 29% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. It currently carries a Zacks Rank #1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 152% in a year.
The consensus estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 64% in the past year.