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Eastman Chemical (EMN) Q3 Earnings, Revenues Top Estimates

Anindya Barman
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Eastman Chemical (EMN) Q3 Earnings, Revenues Top Estimates

Eastman Chemical's (EMN) Q3 results surpassed expectations and the company reaffirmed its earnings growth outlook for 2018.

Eastman Chemical Company EMN  saw higher profits in the third quarter of 2018, aided by strong growth in its specialty businesses and cost management actions. The chemical maker recorded profit of $412 million or $2.89 per share, up roughly 28% from the year-ago figure of $323 million or $2.22.

Barring one-time items, earnings were $2.34 per share for the quarter, up from $2.19 in the year ago-quarter. Earnings topped the Zacks Consensus Estimate of $2.29.

Revenues rose around 3% year over year to $2,547 million in the quarter, also coming ahead of the Zacks Consensus Estimate of $2,534.9 million.

Eastman Chemical Company Price, Consensus and EPS Surprise

 

Eastman Chemical Company Price, Consensus and EPS Surprise

Eastman Chemical Company price-consensus-eps-surprise-chart | Eastman Chemical Company Quote

Segment Review

Revenues from the Additives and Functional Products division went up 3% year over year to $915 million in the reported quarter. The increase was attributable to higher selling prices across most product lines.

Revenues from the Advanced Materials unit rose 10% year over year to $709 million on increased sales volumes and improved product mix.

Chemical Intermediates sales inched up 1% to $703 million on the back of higher selling prices for most product lines.

Fibers segment sales went down 2% to $220 million as a result of lower acetate tow sales volume and reduced acetate tow selling prices due to lower industry capacity utilization.
 
Financials
 
Eastman Chemical ended the quarter with cash and cash equivalents of $193 million, down roughly 1% year over year. Net debt at the end of the quarter was $6,433 million, down around 1% year over year.

The company generated cash from operating activities of $395 million during the third quarter and returned $125 million to shareholders through share repurchases during the quarter.

Outlook

Eastman Chemical noted that strong volume gains in the specialty businesses, disciplined cost management and a lower effective tax rate helped it achieve adjusted earnings per share growth of 13% year over year during the first nine months of 2018. The company continues to expect adjusted earnings per share growth for 2018 to be 10-14% year over year. The company also expects to generate roughly $1.1 billion of free cash flow in 2018.

Price Performance

Eastman Chemical’s shares have lost 16.5% over the past year, outperforming the 21.8% decline of the industry it belongs to.



 

Zacks Rank and Stocks to Consider

Eastman Chemical currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Methanex Corporation MEOH, KMG Chemicals, Inc. KMG and CF Industries Holdings, Inc. CF, each carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. The company’s shares have rallied around 28% over a year.

KMG Chemicals has an expected long-term earnings growth rate of 28.5%. The company’s shares are up roughly 37% over a year.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained around 21% in a year’s time.

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Eastman Chemical Company (EMN) : Free Stock Analysis Report
 
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