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Why is Eastman Chemical (EMN) Up 1.3% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Eastman Chemical Company (EMN - Free Report) . Shares have added about 1.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is EMN due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Eastman Chemical's Q1 Earnings, Sales Trump Estimates

Eastman Chemical saw higher profits in the first quarter of 2018, aided by strong growth in its specialty businesses and cost-management actions. The chemical maker recorded profit of $290 million or $2.00 per share, a roughly 4% rise from the year-ago period figure of $278 million or $1.89.

Barring one-time items, earnings were $2.23 per share for the quarter, up from $1.83 from the year ago-quarter. Earnings surpassed the Zacks Consensus Estimate of $2.11.

Revenues rose around 13% year over year to $2,607 million in the quarter, also coming ahead of the Zacks Consensus Estimate of $2,461 million.

Segment Review

Revenues from the Additives and Functional Products division went up 21% year over year to $939 million in the reported quarter. The increase was attributable to higher sales volumes for most product lines, favorable currency swings and increased selling prices.

Revenues from the Advanced Materials unit rose 9% year over year to $693 million on increased sales volume of premium products.

Chemical Intermediates sales rose 9% to $730 million on the back of higher selling prices and improved market conditions.

Fibers segment sales went up 15% to $245 million due to higher sales volume for acetate tow and acetate flake.

Financials
 
Eastman Chemical ended the quarter with cash and cash equivalents of $194 million, down roughly 2% year over year. Net debt at the end of the quarter was $6,706 million, essentially flat year over year.

The company returned $100 million to shareholders through share repurchases during the quarter.

Outlook

Eastman Chemical raised its earnings growth expectations for 2018 based on strong first-quarter results. The company now expects adjusted earnings per share growth for 2018 to be 10-14% year over year, up from its prior view of 8-12% growth. The company also noted that it will remain committed to offset volatility in raw material and energy prices, especially olefins.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to one lower.

VGM Scores

At this time, EMN has a poor Growth Score of F, however its Momentum is doing a lot better with a B. 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.

Our style scores indicate that the stock is more suitable for value investors than momentum investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, EMN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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