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Eastman Chemical's Stock Gains 14% in 3 Months: Here's Why
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Eastman Chemical Company’s (EMN - Free Report) shares have gained 13.5% over the past three months. The company has outperformed its industry’s rise of 5% over the same time frame. It has also topped the S&P 500’s around 5% growth over the same period.
Let’s take a look into the factors behind EMN stock’s price appreciation.
Image Source: Zacks Investment Research
EMN Stock Gains on Cost Actions & Innovation
Eastman is benefiting from its innovation-driven growth model and actions to manage costs. It is expected to gain from lower operating costs from its operational transformation program.
The company is taking action to keep its manufacturing and administrative costs in control. EMN achieved cost savings of around $200 million in 2023, net of inflation. Pricing initiatives across the segments 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 this year.
EMN’s goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Its sales volumes are expected to be supported by innovation and market development initiatives. Its specialty portfolio is likely to drive sales growth across key end markets such as consumer durables, building & construction and transportation.
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.
Strong Financial Health Supports EMN’s Capital Allocation
EMN 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. In the second quarter of 2024, EMN generated a strong operating cash flow of $367 million and ended the quarter with cash and cash equivalents of $514 million. The company returned $195 million to shareholders through share repurchases and dividends in the second quarter. It has also raised its dividend for the 14th consecutive year. EMN expects to repurchase shares worth around $300 million in 2024. It expects to deliver around $1.4 billion in operating cash flow in 2024.
The Zacks Consensus Estimate for IAMGOLD’s current-year earnings has increased by 46.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 200%. Its shares have shot up roughly 166% in the past year.
The consensus estimate for Eldorado Gold’s current year earnings is pegged at $1.40 per share, indicating a year-over-year rise of 145.6%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 103% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal-year earnings is pegged at $4.14, indicating a rise of 15.3% from year-ago levels. The Zacks Consensus Estimate for HWKN’s current fiscal-year earnings has increased 12.8% in the past 60 days. The stock has rallied around 101% in the past year.
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Eastman Chemical's Stock Gains 14% in 3 Months: Here's Why
Eastman Chemical Company’s (EMN - Free Report) shares have gained 13.5% over the past three months. The company has outperformed its industry’s rise of 5% over the same time frame. It has also topped the S&P 500’s around 5% growth over the same period.
Let’s take a look into the factors behind EMN stock’s price appreciation.
EMN Stock Gains on Cost Actions & Innovation
Eastman is benefiting from its innovation-driven growth model and actions to manage costs. It is expected to gain from lower operating costs from its operational transformation program.
The company is taking action to keep its manufacturing and administrative costs in control. EMN achieved cost savings of around $200 million in 2023, net of inflation. Pricing initiatives across the segments 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 this year.
EMN’s goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Its sales volumes are expected to be supported by innovation and market development initiatives. Its specialty portfolio is likely to drive sales growth across key end markets such as consumer durables, building & construction and transportation.
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.
Strong Financial Health Supports EMN’s Capital Allocation
EMN 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. In the second quarter of 2024, EMN generated a strong operating cash flow of $367 million and ended the quarter with cash and cash equivalents of $514 million. The company returned $195 million to shareholders through share repurchases and dividends in the second quarter. It has also raised its dividend for the 14th consecutive year. EMN expects to repurchase shares worth around $300 million in 2024. 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
EMN’s Zacks Rank & Key Picks
EMN currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space are IAMGOLD Corporation (IAG - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Hawkins, Inc. (HWKN - Free Report) . While IAMGOLD and Eldorado Gold sport a Zacks Rank #1 (Strong Buy), Hawkins 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 IAMGOLD’s current-year earnings has increased by 46.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 200%. Its shares have shot up roughly 166% in the past year.
The consensus estimate for Eldorado Gold’s current year earnings is pegged at $1.40 per share, indicating a year-over-year rise of 145.6%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 103% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal-year earnings is pegged at $4.14, indicating a rise of 15.3% from year-ago levels. The Zacks Consensus Estimate for HWKN’s current fiscal-year earnings has increased 12.8% in the past 60 days. The stock has rallied around 101% in the past year.