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Eastman Chemical (EMN) Q1 Earnings: What's in the Cards?
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Eastman Chemical (EMN - Free Report) is set to release first-quarter 2017 results after the bell on Apr 27.
Eastman Chemical saw higher profits on a reported basis in the fourth quarter of 2016, aided by its cost management actions and growth of its high-margin products. Adjusted earnings of $1.51 per share in the quarter topped the Zacks Consensus Estimate of $1.48. Revenues fell around 2% year over year to $2,188 million in the quarter, but beat the Zacks Consensus Estimate of $2,151 million.
Eastman Chemical has beaten the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 5.86%. Let’s see how things are shaping up prior to this announcement.
Eastman Chemical, in its fourth-quarter earnings call, said that it expects to gain from its strong portfolio of specialty businesses and growth of its high-value specialty products amid an uncertain global operating environment. The company sees adjusted earnings per share growth for 2017 to be 8%-12%.
Eastman Chemical remains focused on cost cutting and productivity actions amid a challenging operating environment. The company delivered around $100 million of costs savings for full-year 2016. Eastman Chemical also expects to deliver an additional $100 million of cost savings in 2017. Its cost reduction actions are expected to contribute around 50 cents to earnings per share in 2017.
In addition, Eastman Chemical remains committed to reduce debt and boost shareholder returns. The company reduced its net debt by more than $400 million in 2016. Its total debt fell roughly 6% year over year to $6.6 billion at the end of 2016.
Eastman Chemical is also gaining from synergies of acquisitions, especially Taminco Corporation. The Taminco acquisition has provided attractive cost and revenue synergy opportunities.
Eastman Chemical also outperformed the Zacks categorized Chemicals-Diversified industry over the past six months, partly attributable to its forecast-topping earnings performance in the last two quarters. The company’s shares have gained around 21.1% over this period, compared with roughly 14.6% gain recorded by the industry.
However, the company faces pricing pressure across most of its business segments as witnessed in the last reported quarter. Lower prices weighed on its top line in the quarter. The company is seeing competitive pressure, especially from the Asia Pacific region, which is hurting prices.
Eastman Chemical also faces currency translation risks given a stronger U.S. dollar vis-à-vis a basket of currencies. Its revenues remain exposed to unfavorable currency swings.
Earnings Whispers
Our proven model does not conclusively show that Eastman Chemical is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP for Eastman Chemical is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.74. 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 #3 which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Methanex Corporation (MEOH - Free Report) has an Earnings ESP of +13.04% and carries a Zacks Rank #1.
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +2.11% and carries a Zacks Rank #2.
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Eastman Chemical (EMN) Q1 Earnings: What's in the Cards?
Eastman Chemical (EMN - Free Report) is set to release first-quarter 2017 results after the bell on Apr 27.
Eastman Chemical saw higher profits on a reported basis in the fourth quarter of 2016, aided by its cost management actions and growth of its high-margin products. Adjusted earnings of $1.51 per share in the quarter topped the Zacks Consensus Estimate of $1.48. Revenues fell around 2% year over year to $2,188 million in the quarter, but beat the Zacks Consensus Estimate of $2,151 million.
Eastman Chemical has beaten the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 5.86%. Let’s see how things are shaping up prior to this announcement.
Eastman Chemical Company Price and EPS Surprise
Eastman Chemical Company Price and EPS Surprise | Eastman Chemical Company Quote
Factors to Consider
Eastman Chemical, in its fourth-quarter earnings call, said that it expects to gain from its strong portfolio of specialty businesses and growth of its high-value specialty products amid an uncertain global operating environment. The company sees adjusted earnings per share growth for 2017 to be 8%-12%.
Eastman Chemical remains focused on cost cutting and productivity actions amid a challenging operating environment. The company delivered around $100 million of costs savings for full-year 2016. Eastman Chemical also expects to deliver an additional $100 million of cost savings in 2017. Its cost reduction actions are expected to contribute around 50 cents to earnings per share in 2017.
In addition, Eastman Chemical remains committed to reduce debt and boost shareholder returns. The company reduced its net debt by more than $400 million in 2016. Its total debt fell roughly 6% year over year to $6.6 billion at the end of 2016.
Eastman Chemical is also gaining from synergies of acquisitions, especially Taminco Corporation. The Taminco acquisition has provided attractive cost and revenue synergy opportunities.
Eastman Chemical also outperformed the Zacks categorized Chemicals-Diversified industry over the past six months, partly attributable to its forecast-topping earnings performance in the last two quarters. The company’s shares have gained around 21.1% over this period, compared with roughly 14.6% gain recorded by the industry.
However, the company faces pricing pressure across most of its business segments as witnessed in the last reported quarter. Lower prices weighed on its top line in the quarter. The company is seeing competitive pressure, especially from the Asia Pacific region, which is hurting prices.
Eastman Chemical also faces currency translation risks given a stronger U.S. dollar vis-à-vis a basket of currencies. Its revenues remain exposed to unfavorable currency swings.
Earnings Whispers
Our proven model does not conclusively show that Eastman Chemical is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP for Eastman Chemical is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.74. 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 #3 which when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the basic materials space that you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +4.08% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex Corporation (MEOH - Free Report) has an Earnings ESP of +13.04% and carries a Zacks Rank #1.
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +2.11% and carries a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>