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Eastman Chemical's (EMN) Shares Gain 14% in 6 Months: Here's Why
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Eastman Chemical Company’s (EMN - Free Report) shares have gained 13.9% over the past six months. The company has also outperformed its industry’s rise of 4.4% over the same time frame. Moreover, it has topped the S&P 500’s around 11% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Working in EMN’s Favor?
Better-than-expected earnings performance in the second quarter and upbeat prospects have contributed to the run-up in the company's shares. EMN’s second-quarter adjusted earnings of $2.15 per share rose from $1.99 in the year-ago quarter. It surpassed the Zacks Consensus Estimate of $1.99. Sales volumes increased in the quarter, led by durables and automotive end markets and the end of customer inventory destocking in most end markets.
Eastman is benefiting from its innovation-driven growth model and actions to manage costs. It is expected to benefit from lower operating costs from its operational transformation program.
The company is taking action to keep its manufacturing and administrative costs in control. It achieved cost savings of around $200 million in 2023, net of inflation. Pricing initiatives and lower raw material and energy costs are also expected to support the company’s bottom line. The company plans to maintain pricing discipline and improve asset utilization throughout the year.
Moreover, Eastman's goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Its sales volumes are expected to be supported by the innovation and market development initiatives.
The company is also expected to gain from the revenues and earnings generated by its Kingsport methanolysis facility in 2024. It anticipates a $50 million incremental EBITDA contribution from the Kingsport facility.
EMN also remains focused on maintaining a disciplined approach to capital allocation with an emphasis on debt reduction. It returned $526 million to shareholders in 2023 through dividends and share repurchases. It also raised its dividend for the 14th consecutive year. EMN expects to repurchase shares worth around $300 million in 2024. Furthermore, it expects to deliver around $1.4 billion in operating cash flow in 2024.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The consensus estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 34% in the past year.
The consensus estimate for Franco-Nevada’s current-year earnings has increased by 3% in the past 60 days. FNV beat the consensus estimate in three of the last four quarters. In this timeframe, it delivered an earnings surprise of around 6%, on average.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $3.65, indicating a year-over-year rise of 63.7%. AEM’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 15.7%. The company’s shares have rallied roughly 68% in the past year.
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Eastman Chemical's (EMN) Shares Gain 14% in 6 Months: Here's Why
Eastman Chemical Company’s (EMN - Free Report) shares have gained 13.9% over the past six months. The company has also outperformed its industry’s rise of 4.4% over the same time frame. Moreover, it has topped the S&P 500’s around 11% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #3 (Hold) stock’s price appreciation.
Image Source: Zacks Investment Research
What’s Working in EMN’s Favor?
Better-than-expected earnings performance in the second quarter and upbeat prospects have contributed to the run-up in the company's shares. EMN’s second-quarter adjusted earnings of $2.15 per share rose from $1.99 in the year-ago quarter. It surpassed the Zacks Consensus Estimate of $1.99. Sales volumes increased in the quarter, led by durables and automotive end markets and the end of customer inventory destocking in most end markets.
Eastman is benefiting from its innovation-driven growth model and actions to manage costs. It is expected to benefit from lower operating costs from its operational transformation program.
The company is taking action to keep its manufacturing and administrative costs in control. It achieved cost savings of around $200 million in 2023, net of inflation. Pricing initiatives and lower raw material and energy costs are also expected to support the company’s bottom line. The company plans to maintain pricing discipline and improve asset utilization throughout the year.
Moreover, Eastman's goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Its sales volumes are expected to be supported by the innovation and market development initiatives.
The company is also expected to gain from the revenues and earnings generated by its Kingsport methanolysis facility in 2024. It anticipates a $50 million incremental EBITDA contribution from the Kingsport facility.
EMN also remains focused on maintaining a disciplined approach to capital allocation with an emphasis on debt reduction. It returned $526 million to shareholders in 2023 through dividends and share repurchases. It also raised its dividend for the 14th consecutive year. EMN expects to repurchase shares worth around $300 million in 2024. Furthermore, it expects to deliver around $1.4 billion in operating cash flow in 2024.
Eastman Chemical Company Price and Consensus
Eastman Chemical Company price-consensus-chart | Eastman Chemical Company Quote
Stocks to Consider
Some better-ranked stocks in the Basic Materials space are Newmont Corporation (NEM - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) . Newmont and Franco-Nevada sport a Zacks Rank #1 (Strong Buy), and Agnico Eagle carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The consensus estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 34% in the past year.
The consensus estimate for Franco-Nevada’s current-year earnings has increased by 3% in the past 60 days. FNV beat the consensus estimate in three of the last four quarters. In this timeframe, it delivered an earnings surprise of around 6%, on average.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $3.65, indicating a year-over-year rise of 63.7%. AEM’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 15.7%. The company’s shares have rallied roughly 68% in the past year.