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Eastman Chemical (EMN)
NYSE:EMN
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Eastman Chemical
(NYSE:EMN)74Outperform
Positive Factors
Earnings Growth
Eastman continues to deliver consistent EPS growth which has been elusive within the sector, driven by volumes from new products in its core portfolio, more demand in stable end markets and cost savings.
Innovation
Eastman innovates on functionality to keep their products near the top of the pyramid and sustain relatively high margins.
Negative Factors
Foreign Exchange
Headwinds from foreign exchange fluctuations are expected to challenge the company's financial performance.
Eastman Chemical (EMN) vs. S&P 500 (SPY)
Market Cap
$10.72B
Dividend Yield3.5%
Average Volume (3M)1.08M
Price to Earnings (P/E)12.1
Beta (1Y)1.02
Revenue Growth1.91%
EPS Growth2.94%
CountryUS
Employees14,000
SectorBasic Materials
Sector Strength56
IndustryChemicals
Share Statistics
EPS (TTM)7.69
Shares Outstanding115,168,380
10 Day Avg. Volume884,863
30 Day Avg. Volume1,084,017
Financial Highlights & Ratios
PEG Ratio4.13
Price to Book (P/B)N/A
Price to Sales (P/S)1.14
Price to Cash Flow (P/CF)5.00
P/FCF Ratio4.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$114.92Price Target Upside17.59% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Eastman Chemical Business Overview & Revenue Model
Company DescriptionEastman Chemical Company is a global specialty materials company that produces a broad range of advanced materials, additives, functional products, specialty chemicals, and fibers. Headquartered in Kingsport, Tennessee, Eastman operates in various sectors, including transportation, building and construction, agriculture, consumables, and personal care, providing innovative solutions that enhance product performance and sustainability.
How the Company Makes MoneyEastman Chemical makes money primarily through the manufacture and sale of specialty chemicals and advanced materials. The company operates through several business segments, including Additives & Functional Products, Advanced Materials, Chemical Intermediates, and Fibers. Revenue is generated from selling products like coatings, adhesives, specialty plastics, and fibers to various industries, including automotive, consumer goods, electronics, and textiles. Significant earnings are derived from long-term supply agreements, research and development partnerships, and a focus on innovation in sustainable and high-performance materials. The company leverages its global production and distribution network to serve a diverse customer base, contributing to consistent revenue streams.
Eastman Chemical Financial Statement Overview
Summary
Eastman Chemical exhibits a strong financial position with solid profitability, efficient operational controls, and a robust balance sheet. The company has effectively managed its debt, resulting in improved financial leverage and stability. While revenue growth remains modest, profitability and cash flow generation are strong, indicating a well-managed business.Income Statement
Eastman Chemical shows a robust performance with a strong gross profit margin of 24.4% for 2024, attributed to efficient cost management. The net profit margin remains healthy at 9.6%, indicating solid profitability. Revenue growth is moderate at 1.9% compared to the previous year, suggesting stability but limited top-line expansion. EBIT and EBITDA margins are strong at 13.9%, reflecting effective operational control. However, revenue has not returned to 2022 levels, indicating potential growth challenges.78
Positive
Balance Sheet
The balance sheet of Eastman Chemical is solid, with a substantial equity base. The equity ratio is 38%, indicating a strong reliance on equity for financing. The company has significantly reduced its debt, resulting in a debt-to-equity ratio of 0, showcasing financial prudence. Return on equity is commendable at 15.7%, indicating efficient use of shareholders' funds. The reduction in total debt improves financial stability and reduces leverage risk.85
Very Positive
Cash Flow
Cash flow analysis reveals strong free cash flow growth of 27.2% in 2024, highlighting improved cash generation capabilities. The operating cash flow to net income ratio stands at 1.42, indicating strong cash earnings support. The free cash flow to net income ratio of 0.76 suggests effective capital expenditure management and healthy free cash flow generation. Overall, cash flow metrics demonstrate the company's solid liquidity position and operational efficiency.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 9.38B | 9.21B | 10.58B | 10.48B | 8.47B | Gross Profit |
| 2.29B | 2.06B | 2.14B | 2.50B | 1.98B | EBIT |
| 1.30B | 1.09B | 1.25B | 1.88B | 968.00M | EBITDA |
| 1.80B | 1.81B | 1.73B | 2.42B | 1.54B | Net Income Common Stockholders |
| 905.00M | 894.00M | 793.00M | 857.00M | 478.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 837.00M | 548.00M | 493.00M | 459.00M | 564.00M | Total Assets |
| 15.21B | 14.63B | 14.67B | 15.52B | 16.08B | Total Debt |
| 5.02B | 4.97B | 5.15B | 5.16B | 5.62B | Net Debt |
| 4.18B | 4.42B | 4.66B | 4.70B | 5.05B | Total Liabilities |
| 9.36B | 9.10B | 9.43B | 9.73B | 9.97B | Stockholders Equity |
| 5.78B | 5.46B | 5.15B | 5.70B | 6.02B |
| Cash Flow | Free Cash Flow | |||
| 688.00M | 541.00M | 351.00M | 1.04B | 1.07B | Operating Cash Flow |
| 1.29B | 1.37B | 975.00M | 1.62B | 1.46B | Investing Cash Flow |
| -534.00M | -432.00M | 392.00M | -29.00M | -394.00M | Financing Cash Flow |
| -454.00M | -888.00M | -1.32B | -1.69B | -704.00M |
Eastman Chemical Technical Analysis
Positive
97.73
Price Trends
94.97
Positive
98.85
Negative
98.88
Negative
Market Momentum
-0.11
Positive
50.50
Neutral
25.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EMN, the sentiment is Positive. The current price of 97.73 is below the 20-day moving average (MA) of 99.27, above the 50-day MA of 94.97, and below the 200-day MA of 98.88, indicating a neutral trend. The MACD of -0.11 indicates Positive momentum. The RSI at 50.50 is Neutral, neither overbought nor oversold. The STOCH value of 25.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EMN.
Eastman Chemical Risk Analysis
Eastman Chemical disclosed 15 risk factors in its most recent earnings report. Eastman Chemical reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Eastman Chemical Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $10.72B | 12.13 | 16.11% | 3.50% | 1.91% | 2.94% | |
65 Neutral | $24.80B | 18.32 | 19.13% | 2.46% | -4.59% | 11.09% | |
59 Neutral | $23.76B | 17.69 | 10.69% | 7.17% | -1.46% | -36.00% | |
58 Neutral | $25.07B | 22.75 | 6.14% | 7.86% | -3.72% | 91.57% | |
57 Neutral | $2.67B | 21.03 | 0.18% | 2.86% | -4.35% | -115.63% | |
50 Neutral | $5.27B | 6.84 | -24.69% | 4.42% | -6.03% | -177.29% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% |
* Basic Materials Sector Average
Performance Comparison
EMN
Eastman Chemical
97.73
13.49
16.01%
ASH
Ashland
59.42
-34.02
-36.41%
CE
Celanese
54.33
-94.80
-63.57%
LYB
LyondellBasell
76.21
-19.45
-20.33%
PPG
PPG Industries
114.09
-23.01
-16.78%
DOW
Dow Inc
37.78
-15.79
-29.48%
Eastman Chemical Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 5.46% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced performance with significant achievements in Advanced Materials and AFP segments, operational improvements in the methanolysis plant, and stability in the fibers business. However, challenges such as headwinds in Advanced Materials, fourth-quarter underperformance, and competitive pressures in Chemical Intermediates balance out these positives.Highlights
Advanced Materials Growth
The Advanced Materials segment showed impressive recovery with strong performance despite a challenging macroeconomic environment, driven by innovation and strategic growth initiatives, including a $50 million contribution from the circular platform.
Successful Methanolysis Plant Operations
The Kingsport methanolysis plant demonstrated operational improvement, achieving 85% DMT yield since its last turnaround, leading to expectations of strong operational leverage in 2025.
AFP Segment Strong Performance
AFP segment delivered high single-digit growth, outperforming expectations due to strong volume and mix growth, price discipline, and cost management.
Fibers Business Stability
The fibers business is expected to maintain attractive pricing and margins due to stable end-market demand and strategic multi-year contracting with customers.
Lowlights
Advanced Materials Headwinds
Advanced Materials faces headwinds from increasing natural gas prices and currency fluctuations, which are expected to offset some volume and mix growth.
Fourth Quarter Challenges
Eastman experienced modest underperformance in the fourth quarter, missing the low-end of guidance due to higher costs associated with reduced uptime earlier in the year.
Fibers Destocking and Product Discontinuation
The fibers segment is facing destocking and the discontinuation of a profitable product, which are expected to impact performance in 2025.
Chemical Intermediates Competitive Pressure
The Chemical Intermediates segment is experiencing competitive pressure and a challenging environment, impacting spreads and margins.
Company Guidance
During the Eastman Fourth Quarter and Full-Year 2024 Conference Call, the company provided guidance indicating strong performance expectations for 2025, despite facing some headwinds. The Advanced Materials segment is projected to deliver significant growth, driven by the circular platform with an expected contribution of $50 million in earnings, while the overall circular economy growth is guided to be between $75 million to $100 million. The company anticipates cost management efforts to yield $50 million in savings, offsetting some impacts from higher natural gas prices and currency fluctuations, which are expected to be $50 million and $30 million, respectively. In the Fibers segment, despite some destocking, the company maintains stable long-term contracts covering over 80% of 2026 volumes. Additionally, Eastman expects to maintain its $1.3 billion operating cash flow for 2025, with a focus on EBITDA growth and higher cash taxes, and plans to execute $200 million in share buybacks.Eastman Chemical Corporate Events
Business Operations and Strategy
Eastman Chemical Aims for Growth via Circular Economy
Positive
Nov 21, 2024
Eastman Chemical Company, at its 2024 Circular Economy Deep Dive event, highlighted its strategy for significant EBITDA growth through circular economy initiatives, projecting over $2.1 billion in EBITDA in a normalized environment. With a commitment to innovation and sustainability, Eastman plans substantial investments in methanolysis projects and biopolymer platforms, aiming for $500 million additional EBITDA by 2029. This positions Eastman as a strong growth opportunity, leveraging economic recovery and strategic investments to secure future value.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.