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Eastman Chemical (EMN) Tops Q2 Earnings, Revenue Estimates

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Eastman Chemical Company (EMN - Free Report) saw its profits rise in the second quarter of 2018, supported by strong growth in its specialty businesses and cost management actions. The chemical maker recorded profit of $344 million or $2.39 per share, a roughly 18% increase from the year-ago figure of $292 million or $2.00.

Barring one-time items, earnings were $2.22 per share for the quarter, up from $1.98 in the year ago-quarter. Earnings surpassed the Zacks Consensus Estimate of $2.20.

Revenues rose around 8% year over year to $2,621 million in the quarter on the back of higher sales volumes, also coming ahead of the Zacks Consensus Estimate of $2,606 million.

Eastman Chemical Company Price, Consensus and EPS Surprise

 

Eastman Chemical Company Price, Consensus and EPS Surprise

Eastman Chemical Company price-consensus-eps-surprise-chart | Eastman Chemical Company Quote

Segment Review

Revenues from the Additives and Functional Products division went up 13% year over year to $942 million in the reported quarter. The increase was attributable to higher sales volumes, favorable currency swings and increased selling prices.

Revenues from the Advanced Materials unit rose 11% year over year to $729 million on increased sales volumes (especially for premium products) and favorable currency impact.

Chemical Intermediates sales inched up 1% to $709 million on the back of higher selling prices for most product lines and favorable market conditions.

Fibers segment sales went up 12% to $241 million partly due to higher sales volume for acetate tow and growth in the textiles innovation platform.
 
Financials
 

Eastman Chemical ended the quarter with cash and cash equivalents of $193 million, down roughly 13% year over year. Net debt at the end of the quarter was $6,502 million, down 2% year over year.

The company generated cash from operating activities of $443 million during the second quarter and returned $150 million to shareholders through share repurchases during the quarter.

Outlook

Eastman Chemical noted that strong volume gains in the specialty businesses and disciplined cost management helped it achieve strong earnings growth during the first half of 2018. The company continues to expect adjusted earnings per share growth for 2018 to be 10-14% year over year. The company also expects to generate $1.1 billion of free cash flow in 2018.

Price Performance

Eastman Chemical’s shares have rallied 20.5% over the past year, outperforming the 6.2% growth of the industry it belongs to.



 

Zacks Rank & Other Stocks to Consider

Eastman Chemical currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks worth considering in the basic materials space include KMG Chemicals, Inc. , Methanex Corporation (MEOH - Free Report) and BHP Billiton Limited (BHP - Free Report) each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have gained roughly 44% over a year.

Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 55% in a year.

BHP Billiton has an expected long-term earnings growth rate of 5.3%. Its shares have shot up roughly 23% over a year.

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