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Eastman (EMN) Chosen by DOE for Up to $375M Investment

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Eastman Chemical Company (EMN - Free Report) recently stated substantial progress toward leadership in the circular economy. The Department of Energy ("DOE") has selected it as one of 33 businesses to participate in award talks to support Eastman's second molecular recycling facility in the United States.

The DOE has selected Eastman's second molecular recycling project in the United States to begin award discussions for up to $375 million in Bipartisan Infrastructure Law and Inflation Reduction Act financing through the Industrial Demonstrations Program. Following the DOE announcement, Eastman announced plans to construct a second molecular recycling facility in Longview, TX.

The Longview site was chosen owing to synergies with existing infrastructure and operations, advantageous energy supply and footprint, and proximity to western and central U.S. feedstock pools. The location also allows for onsite renewable energy. The investment will cover activities to prepare mixed plastic trash for processing, Eastman's next-generation molecular recycling unit to depolymerize waste and a polymer factory to provide virgin-quality materials for packaging and textiles. The Longview molecular recycling facility will have the capacity to recycle around 110,000 metric tons of difficult-to-recycle plastic waste.

The investment is expected to result in more than 200 full-time, high-paying employment in the Longview region, as well as around 1,000 temporary construction positions during site development and facility construction. Eastman has been serving the Longview region for over 70 years and today has more than 1,500 team members at the location.

The DOE selected EMN to speed the demonstration of industry-leading low-carbon intensity recycled PET through this project. A collaboration agreement with the DOE allows for the expansion of the project to include the development of thermal heat batteries and onsite solar power.

Shares of Eastman have gained 18.8% over the past year against a 7.1% decline of its industry.

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The company, on its fourth-quarter call, stated that it expects volume increase due to the absence of client inventory destocking in its end markets, with the notable exception of medical and agriculture, which will continue to destock in the first quarter of 2024.

EMN anticipates minor primary demand increases in several stable end industries, with discretionary end markets remaining steady. It expects to gain from the revenues and earnings generated by its Kingsport methanolysis facility. Taking all of this into account, the company expects 2024 EPS to range between $7.25 and $8.00, with cash from operations of around $1.4 billion.

Zacks Rank & Key Picks

Eastman currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) .

Denison Mines sports a Zacks Rank #1 (Strong Buy). DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared 96.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology currently carries a Zacks Rank #1. 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 soared 64.8% in the past year.

The Zacks 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 77.5% in the past year.

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