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Eastman Chemical (EMN)
NYSE:EMN

Eastman Chemical (EMN) AI Stock Analysis

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Eastman Chemical

(NYSE:EMN)

Rating:67Neutral
Price Target:
$85.00
▲(7.83%Upside)
Eastman Chemical's stock score is primarily supported by solid financial performance and attractive valuation metrics, suggesting potential for value investors. However, technical analysis indicates bearish momentum, and there are economic challenges highlighted in the earnings call that could impact future performance. Investors should monitor tariff-related impacts and cash flow management closely.
Positive Factors
Cost savings
Cost cutting is expected to generate $75m in net savings.
Financial resilience
The company has one of the best balance sheets in the group with net debt/EBITDA expected to remain at 2.4x by year-end.
State incentives
EMN received $70MM in incentives from the State of Texas.
Negative Factors
Loss of funding
Eastman has lost its $375 million grant from the Department of Energy associated with the thermal energy/battery aspect of its Longview, Texas molecular recycling facility.
Lower demand
CapEx is higher versus 2021 and demand is lower, so there are no doubt issues to work through.
Soft end-market demand
Demand from auto, consumer durable, and construction end markets likely remains soft through the end of the year.

Eastman Chemical (EMN) vs. SPDR S&P 500 ETF (SPY)

Eastman Chemical Business Overview & Revenue Model

Company DescriptionEastman Chemical Company (EMN) is a global specialty materials company that produces a broad range of advanced materials, chemicals, and fibers. The company operates through several segments, including Additives & Functional Products, Advanced Materials, Chemical Intermediates, and Fibers. Eastman Chemical serves diverse markets such as transportation, building and construction, consumables, and textiles, providing innovative solutions that enhance the performance and functionality of its customers' products.
How the Company Makes MoneyEastman Chemical makes money primarily through the production and sale of specialty chemicals and advanced materials. The company's revenue model is based on its diversified product portfolio and its ability to serve a wide array of industries. Key revenue streams include sales from the Additives & Functional Products segment, which offers chemicals that improve the performance of products in industries like automotive and agriculture; the Advanced Materials segment, which provides high-performance polymers and films; and the Chemical Intermediates segment, which supplies raw materials for industrial processes. Eastman's Fibers segment also contributes to revenue through the production of cellulose acetate fibers used in textile and cigarette applications. Significant partnerships and customer relationships across diverse industries, as well as a focus on innovation and sustainability, further drive Eastman's earnings.

Eastman Chemical Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: -2.46%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong operational performance and strategic engagement in certain segments, but was overshadowed by significant challenges posed by tariffs and persistent destocking in key markets. The company's cautious approach to capital expenditure and focus on cash flow reflect uncertainty in the current economic environment.
Q1-2025 Updates
Positive Updates
Strong Operational Performance at Kingsport Facility
The Kingsport facility had a successful quarter, maintaining an 85% yield on the DMT feedstock and generating $25 million in earnings without startup costs.
Positive Engagement in Food Packaging
Brands are actively seeking solutions due to limitations in mechanical recycling, creating opportunities for Eastman's PET products in the back half of the year.
DOE Funding Confidence
Eastman expressed confidence in continued DOE funding support for their Longview project, aligning with current administration's priorities.
Negative Updates
Tariff-Related Revenue Impact
Eastman revised its revenue guidance for renew from $75-100 million to $50-75 million due to trade tensions and tariffs between China and the US.
Persistent Destocking in Fibers
The fibers segment is facing a double hit from tariffs and ongoing destocking, which is lasting longer than expected, impacting volume.
Tariff Impact on Advanced Materials
The advanced materials segment, especially performance films and specialty plastics, faces potential headwinds due to tariffs impacting sales to China.
Company Guidance
During the first quarter of fiscal year 2025, Eastman provided guidance on several key metrics and operational updates. The company reported a successful quarter with an 85% yield on DMT feedstock at the Kingsport facility, contributing approximately $25 million in earnings in the corporate other area. Operationally, Eastman is on track to achieve $50 million of EBITDA from manufacturing cost savings, out of an initial guidance of $75 to $100 million. However, revenue guidance for renew products was revised downwards to $50 to $75 million due to economic tensions and tariff impacts, particularly affecting the consumer durable market between China and the US. Despite these challenges, Eastman maintains over 100 customer engagements, and the operational side of the fibers business remains stable with a 90% contract rate for the year. The company also highlighted a $30 million impact from tariffs in the second quarter, mainly affecting volume rather than duty costs. Eastman has adjusted its capital expenditure plan, reducing it from $750 million to $550 million, with an emphasis on efficient deployment and maintaining project timelines, particularly for the Longview, Texas project. The company remains confident in its cash flow guidance, leveraging working capital, operating solutions, and variable resources to navigate the uncertain economic environment.

Eastman Chemical Financial Statement Overview

Summary
Eastman Chemical displays strong profitability and operational efficiency, supported by healthy profit margins and a balanced capital structure. The company demonstrates effective use of equity to generate returns, although a slight revenue decline and free cash flow contraction highlight areas for improvement. Maintaining revenue growth and enhancing cash generation will be crucial for sustaining financial health and supporting future investments.
Income Statement
70
Positive
Eastman Chemical's TTM (Trailing-Twelve-Months) gross profit margin stands at 25.06%, indicating solid profitability. The net profit margin is 9.85%, which reflects consistent earnings relative to revenue. Although the revenue has slightly declined by 0.25% from the previous year, the EBIT and EBITDA margins remain strong at 15.30% and 18.84% respectively. These figures suggest effective cost management and operational efficiency. However, the slight revenue decline is a concern that could impact future profitability if not addressed.
Balance Sheet
75
Positive
The company's debt-to-equity ratio is 0.86, which indicates a balanced capital structure with a manageable level of debt. The return on equity (ROE) is 15.70%, reflecting effective use of shareholders' capital to generate profits. Additionally, the equity ratio is 39.22%, suggesting a strong equity position relative to total assets. Overall, the balance sheet demonstrates financial stability with room for leveraging opportunities if needed.
Cash Flow
65
Positive
Eastman Chemical's TTM operating cash flow to net income ratio is 1.23, showing strong cash conversion from profits. The free cash flow to net income ratio is 0.62, indicating a solid ability to generate cash after capital expenditures. However, the free cash flow growth rate declined by 16.28% from the previous period, suggesting potential challenges in maintaining cash reserves. The company needs to focus on improving its free cash flow generation to ensure long-term financial flexibility.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
9.36B9.38B9.21B10.58B10.48B8.47B
Gross Profit
2.35B2.29B2.06B2.14B2.50B1.98B
EBIT
1.43B1.30B1.09B1.25B1.88B968.00M
EBITDA
1.88B1.80B1.81B1.73B2.42B1.54B
Net Income Common Stockholders
922.00M905.00M894.00M793.00M857.00M478.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
418.00M837.00M548.00M493.00M459.00M564.00M
Total Assets
14.97B15.21B14.63B14.67B15.52B16.08B
Total Debt
5.02B5.02B4.97B5.15B5.16B5.62B
Net Debt
4.60B4.18B4.42B4.66B4.70B5.05B
Total Liabilities
9.03B9.36B9.10B9.43B9.73B9.97B
Stockholders Equity
5.87B5.78B5.46B5.15B5.70B6.02B
Cash FlowFree Cash Flow
576.00M688.00M541.00M351.00M1.04B1.07B
Operating Cash Flow
1.14B1.29B1.37B975.00M1.62B1.46B
Investing Cash Flow
-486.00M-534.00M-432.00M392.00M-29.00M-394.00M
Financing Cash Flow
-726.00M-454.00M-888.00M-1.32B-1.69B-704.00M

Eastman Chemical Technical Analysis

Technical Analysis Sentiment
Negative
Last Price78.83
Price Trends
50DMA
79.68
Negative
100DMA
87.30
Negative
200DMA
93.63
Negative
Market Momentum
MACD
-0.23
Positive
RSI
45.95
Neutral
STOCH
37.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EMN, the sentiment is Negative. The current price of 78.83 is below the 20-day moving average (MA) of 80.78, below the 50-day MA of 79.68, and below the 200-day MA of 93.63, indicating a bearish trend. The MACD of -0.23 indicates Positive momentum. The RSI at 45.95 is Neutral, neither overbought nor oversold. The STOCH value of 37.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
EMEMN
67
Neutral
$9.05B9.9816.16%4.19%2.78%1.50%
66
Neutral
$9.07B12.3512.52%-2.64%173.69%
PPPPG
64
Neutral
$25.26B18.8518.47%2.44%-7.67%-0.58%
WLWLK
56
Neutral
$9.25B24.213.71%2.92%-1.27%48.34%
51
Neutral
$2.03B-1.13-21.36%3.65%2.87%-30.54%
ALALB
50
Neutral
$6.90B-10.58%2.75%-39.34%-500.52%
SQSQM
48
Neutral
$9.12B15.5312.17%0.47%-28.74%53.25%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
EMN
Eastman Chemical
78.83
-20.95
-21.00%
ALB
Albemarle
59.83
-52.21
-46.60%
PPG
PPG Industries
112.60
-12.92
-10.29%
SQM
Sociedad Quimica Y Minera SA
32.76
-13.10
-28.57%
WLK
Westlake Corporation
73.56
-73.90
-50.12%
AVTR
Avantor
13.07
-10.40
-44.31%

Eastman Chemical Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Eastman Chemical Announces Leadership Transition Plan
Neutral
May 6, 2025

In January 2025, Eastman Chemical‘s Steve Crawford transitioned to Executive Vice President, Methanolysis Operations and Worldwide Engineering and Construction Transformation to oversee the Kingsport Methanolysis facility’s startup. With the successful completion of this project, the company decided to eliminate his position as part of succession planning, effective June 2, 2025. Crawford’s responsibilities will be reassigned to other executives, and he will receive severance benefits for his 41 years of service.

Executive/Board Changes
Eastman Chemical Announces Severance Agreement with Executive
Neutral
Mar 14, 2025

On March 10, 2025, Eastman Chemical Company entered into a severance agreement with Brad A. Lich, outlining severance benefits in the event of certain employment terminations. The agreement includes a $2 million cash severance payment and up to four months of healthcare coverage, contingent on compliance with restrictive covenants and a release of claims.

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.