Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Eastman Chemical Company (NYSE:EMN) due to its excellent fundamentals in more than one area. EMN is a financially-sound company with a strong history high-grade dividend payments, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, take a look at the report on Eastman Chemical here.
Established dividend payer and good value
EMN's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that EMN manages its cash and cost levels well, which is an important determinant of the company’s health. EMN seems to have put its debt to good use, generating operating cash levels of 0.24x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. EMN's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Also, relative to the rest of its peers with similar levels of earnings, EMN's share price is trading below the group's average. This supports the theory that EMN is potentially underpriced.
For those seeking income streams from their portfolio, EMN is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 3.7%.
For Eastman Chemical, I've put together three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for EMN’s future growth? Take a look at our free research report of analyst consensus for EMN’s outlook.
- Historical Performance: What has EMN's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of EMN? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.