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Eastman Chemical (EMN) Down 2.1% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Eastman Chemical Company (EMN - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Eastman Chemical saw higher profits on a reported basis in the first quarter of 2017, aided by its aggressive cost management actions, disciplined capital allocation and growth of high-margin products. The company recorded earnings of $278 million or $1.89 per share, up from the year-ago figure of $251 million or $1.69.
Barring one-time items, earnings were $1.83 per share for the quarter, up from $1.71 in the year ago-quarter. Earnings topped the Zacks Consensus Estimate of $1.74 per share.
Revenues rose around 2.9% year over year to $2,303 million in the quarter, beating the Zacks Consensus Estimate of $2,241 million.
Segment Review
Revenues from the Additives and Functional Products division went up 4.9% year over year to $773 million in the reported quarter. The increase was mainly attributable to higher sales volume across the segment which partly offset the impact of lower sales prices and unfavorable foreign currency translations.
Revenues from the Advanced Materials unit rose 7.6% year over year to $634 million as fixed cost leverage and higher sales volume of premium products partly offset lower selling prices, high raw material and energy costs.
Chemical Intermediates sales rose 8% to $670 million on the back of higher sales prices which absorbed the impact of high raw material cost and improved competitive conditions.
Fibers segment sales plunged around 24% to $213 million due to reduced sales volume and lower selling prices, in particular, for acetate tow.
Financials
Eastman Chemical ended the first quarter of 2017 with cash and cash equivalents of $197 million, down roughly 2.5% year over year. Net debt (total debt less cash and cash equivalent) at the end of first quarter was $6,686 million. Eastman Chemical generated operating cash flows of $52 million during the quarter. The company returned $75 million to shareholders through share repurchases.
Outlook
According to the Board Chair and CEO, Mark Costa, the company expects to drive growth on the back of innovation and high margin products, amid uncertain global business environment. It believes that disciplined capital allocation and aggressive cost management policies should contribute to earnings growth and assists to offset challenges faced by the company in Fibers segment. In 2017, the company expects adjusted earnings per share to grow 8–12%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter compared to two upward.
At this time, Eastman Chemical's stock has a subpar Growth Score of 'D', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable soley for value investors, based on our styles scores.
Outlook
While estimates have been trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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Eastman Chemical (EMN) Down 2.1% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Eastman Chemical Company (EMN - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Eastman Chemical's Q1 Earnings & Revenues Beat Estimates
Eastman Chemical saw higher profits on a reported basis in the first quarter of 2017, aided by its aggressive cost management actions, disciplined capital allocation and growth of high-margin products. The company recorded earnings of $278 million or $1.89 per share, up from the year-ago figure of $251 million or $1.69.
Barring one-time items, earnings were $1.83 per share for the quarter, up from $1.71 in the year ago-quarter. Earnings topped the Zacks Consensus Estimate of $1.74 per share.
Revenues rose around 2.9% year over year to $2,303 million in the quarter, beating the Zacks Consensus Estimate of $2,241 million.
Segment Review
Revenues from the Additives and Functional Products division went up 4.9% year over year to $773 million in the reported quarter. The increase was mainly attributable to higher sales volume across the segment which partly offset the impact of lower sales prices and unfavorable foreign currency translations.
Revenues from the Advanced Materials unit rose 7.6% year over year to $634 million as fixed cost leverage and higher sales volume of premium products partly offset lower selling prices, high raw material and energy costs.
Chemical Intermediates sales rose 8% to $670 million on the back of higher sales prices which absorbed the impact of high raw material cost and improved competitive conditions.
Fibers segment sales plunged around 24% to $213 million due to reduced sales volume and lower selling prices, in particular, for acetate tow.
Financials
Eastman Chemical ended the first quarter of 2017 with cash and cash equivalents of $197 million, down roughly 2.5% year over year. Net debt (total debt less cash and cash equivalent) at the end of first quarter was $6,686 million. Eastman Chemical generated operating cash flows of $52 million during the quarter. The company returned $75 million to shareholders through share repurchases.
Outlook
According to the Board Chair and CEO, Mark Costa, the company expects to drive growth on the back of innovation and high margin products, amid uncertain global business environment. It believes that disciplined capital allocation and aggressive cost management policies should contribute to earnings growth and assists to offset challenges faced by the company in Fibers segment. In 2017, the company expects adjusted earnings per share to grow 8–12%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been three downward revisions for the current quarter compared to two upward.
Eastman Chemical Company Price and Consensus
Eastman Chemical Company Price and Consensus | Eastman Chemical Company Quote
VGM Scores
At this time, Eastman Chemical's stock has a subpar Growth Score of 'D', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable soley for value investors, based on our styles scores.
Outlook
While estimates have been trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.