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5 Reasons to Add Eastman Chemical (EMN) to Your Portfolio

Anindya Barman
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5 Reasons to Add Eastman Chemical (EMN) to Your Portfolio

Based on its compelling prospects, we believe Eastman Chemical (EMN) has plenty of upside potential.

Eastman Chemical Company’s EMN stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s take a look into the factors that make this chemical maker an attractive investment option.

What’s Working in Favor of EMN?

Solid Rank & VGM Score: Eastman Chemical currently sports a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

An Outperformer: Eastman Chemical has outperformed the industry over a year. The company’s shares have gained around 8.5% over this period, compared with roughly 3.9% decline recorded by the industry.


Positive Earnings Surprise History: Eastman Chemical has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of roughly 11.5%.

Superior Return on Equity (ROE): Eastman Chemical’s ROE of 21.8%, as compared with the industry average of 9.6%, manifests the company’s efficiency in utilizing shareholder’s funds.

Growth Drivers in Place: Eastman Chemical continues to expect adjusted earnings per share growth for 2018 to be 10-14% year over year. Strong volume gains in specialty businesses and disciplined cost management helped it achieve strong earnings growth during the first half of 2018.

Eastman Chemical’s high margin products and its aggressive cost management actions are likely to continue to drive its earnings. Its focus on productivity and cost-cutting actions is helping it to offset raw material cost inflation and other cost headwinds. Eastman Chemical expects to realize $100 million of cost savings in 2018, under its cost-reduction program.

The company should also gain from its strategic acquisitions, especially Taminco Corporation. The buyout has strengthened the company’s foothold in attractive niche end-markets including food, feed and agriculture where it has a strong presence. The acquisition has also provided attractive cost and revenue synergy opportunities.

Moreover, Eastman Chemical is committed to boosting shareholder returns leveraging strong free cash flows. The company returned roughly $410 million to shareholders during the first half of 2018. Eastman Chemical expects to generate solid free cash flow of more than $1.1 billion in 2018.

Eastman Chemical Company Price and Consensus


Eastman Chemical Company Price and Consensus | Eastman Chemical Company Quote

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Trinseo S.A. TSE and Quaker Chemical Corporation KWR, each carrying a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle has an expected long-term earnings growth rate of 14.2%. The company’s shares are up roughly 9% over the past six months.

Trinseo has an expected long-term earnings growth rate of 12%. The company’s shares have gained around 10% over the past six months.

Quaker Chemical has an expected long-term earnings growth rate of 11%. The company’s shares have rallied around 34% over the past six months.

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Eastman Chemical Company (EMN) : Free Stock Analysis Report
Albemarle Corporation (ALB) : Free Stock Analysis Report
Trinseo S.A. (TSE) : Free Stock Analysis Report
Quaker Chemical Corporation (KWR) : Free Stock Analysis Report
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