Back to top

Eastman Chemical (EMN) Q2 Earnings: What's in the Cards?

Read MoreHide Full Article

Eastman Chemical Company (EMN - Free Report) is set to release second-quarter 2017 results after closing the bell on Jul 27.

Eastman Chemical witnessed higher profits on a reported basis in first-quarter 2017, aided by its aggressive cost management actions, disciplined capital allocation and growth of high-margin products. The chemical maker recorded earnings of $278 million or $1.89 per share in the first quarter, 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 first quarter, beating the Zacks Consensus Estimate of $2,241 million.

Eastman Chemical topped the Zacks Consensus Estimate in three of the trailing four quarters with an average beat of 4.21%.

Eastman Chemical stock has gained 5.4% in the last three months, outperforming the 3.1% gain of the industry it belongs to.


Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Eastman Chemical, in its last earnings call, announced that it expects growth to be driven by innovation and high margin products, amid uncertain global business environment. The company believes that disciplined capital allocation and aggressive cost management policies should contribute to earnings growth and offset challenges faced by the company in Fibers segment. In 2017, the company expects adjusted earnings per share to grow 8–12%.

Earnings for the company’s Advanced Materials unit in the first quarter increased owing to strong sales volume growth, better product mix of premium products and fixed cost leverage that more than offset higher raw material energy costs and modestly lower selling prices. Also, the company witnessed an increase in operating margin in the quarter amid an environment of raw materials inflation and unfavorable currency.

The Additives & Functional Products segment witnessed modest increase in operating earnings in the quarter as improved sales volume was mostly offset by higher raw material and energy costs, lower selling prices and unfavorable currency.

Eastman Chemical remains focused on cost cutting and productivity actions amid a challenging operating environment. Further, the company should gain from its strategic acquisitions (especially Taminco Corporation) and capacity expansion actions. The company also remains committed to reduce debt and boost shareholders return by leveraging healthy free cash flows.

Eastman Chemical Company Price and EPS Surprise


Eastman Chemical Company Price and EPS Surprise | Eastman Chemical Company Quote

Earnings Whispers

Our proven model does not conclusively show that Eastman Chemical is likely to beat earnings 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 the case here as you will see below:

Zacks ESP: Earnings ESP for Eastman Chemical is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at $1.89. 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 #2 which when combined with a 0.00% ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Westlake Chemical Corp. (WLK - Free Report) has an Earnings ESP of +5.04% and a Zacks Rank #1.

The Chemours Company (CC - Free Report) has an Earnings ESP of +4.44% and a Zacks Rank #1.

Agnico Eagle Mines Ltd. (AEM - Free Report) has an Earnings ESP of +6.67% and carries a Zacks Rank #2.

More Stock News: Tech Opportunity Worth $386 Billion in 2017

From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.

Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>

More from Zacks Analyst Blog

You May Like