Back to top

Image: Bigstock

Eastman Chemical (EMN) Lags Q3 Earnings and Revenue Estimates

Read MoreHide Full Article

Eastman Chemical Company (EMN - Free Report) saw its profits drop in the third quarter of 2019, hurt by lower demand due to trade issues. The chemical maker recorded profit of $266 million or $1.93 per share, down roughly 35% from the year-ago profit of $412 million or $2.89.

Barring one-time items, earnings were $1.94 per share for the quarter, down from $2.34 in the year ago-quarter. Earnings also trailed the Zacks Consensus Estimate of $1.99.

Revenues dropped around 9% year over year to $2,325 million in the quarter. The company saw lower sales across its segments. The top line missed the Zacks Consensus Estimate of $2,365.9 million.

The company faced challenging global economic conditions in the third quarter due to trade tensions. Trade-related pressures impacted consumer discretionary markets such as transportation and consumer durables.

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 fell 9% year over year to $832 million for the reported quarter. The decline was due to reduced sales volume, unfavorable product mix, lower selling prices and unfavorable currency swings.

Revenues from the Advanced Materials unit declined 2% year over year to $697 million. The decline is attributable to reduced selling prices and unfavorable foreign currency translation.

Chemical Intermediates sales went down 18% to $579 million, hurt by lower selling prices and reduced sales volumes, especially for functional amines products and intermediates.

Fibers segment sales edged down 1% to $217 million, impacted by reduced acetate flake sales volume to the company’s acetate tow joint venture in China resulting from customer buying patterns.
 
Financials

Eastman Chemical ended the quarter with cash and cash equivalents of $207 million, up around 7% year over year. Net debt at the end of the quarter was $6,002 million, down around 7% year over year.

Eastman Chemical generated cash from operating activities of $416 million and free cash flow of $306 million during the reported quarter. The company returned $160 million to shareholders through share repurchases and dividends in the quarter.

Outlook

Eastman Chemical noted that it expects sales volumes and capacity utilization to decline in the fourth quarter due to the worsened global business environment resulting from trade uncertainties and other macro factors. Considering these factors, the company expects adjusted earnings per share for 2019 to be $7.00-$7.20.

Amid the difficult business environment, the company remains focused on managing costs and growing new business revenues from innovation, especially in the Advanced Materials segment.

Price Performance

Eastman Chemical’s shares have gained 2.6% year to date, outperforming the 22.5% decline of the industry it belongs to.



 

Zacks Rank & Key Picks

Eastman Chemical currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 162.9% for the current year. The company’s shares have rallied 64% in a year’s time.

Kinross has projected earnings growth rate of 210% for the current year. The company’s shares have surged around 80% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have gained roughly 54% in a year’s time.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>
 

Published in