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Eastman Chemical Company’s EMN shares have gained around 24% over the past six months. The chemical maker is benefiting from its innovation-driven growth model, operational execution and cost-management actions.
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 Zacks Rank #2 (Buy) stock an attractive choice for investors right now.
Shares of Eastman Chemical have rallied 91.4% over the past year against the 64.7% rise of its industry. It has also outperformed the S&P 500’s roughly 31.8% rise over the same period.
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Estimates Going Up
Over the past two months, the Zacks Consensus Estimate for Eastman Chemical for the current year has increased around 9.9%. The consensus estimate for second-quarter 2021 has also been revised 17.6% upward over the same time frame.
Positive Earnings Surprise History
Eastman Chemical has outpaced the Zacks Consensus Estimate in three of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 2.5%, on average.
Healthy Growth Prospects
The Zacks Consensus Estimate for earnings for 2021 for Eastman Chemical is currently pegged at $8.66, reflecting an expected year-over-year growth of 40.8%. Moreover, earnings are expected to register a 167.1% growth in second-quarter 2021.
Superior Return on Equity (ROE)
Eastman Chemical’s ROE of 13.9%, as compared with the industry average of 11.2%, manifests the company’s efficiency in utilizing shareholder’s funds.
Growth Drivers in Place
Eastman Chemical is witnessing higher demand across building & construction, transportation and consumer durables markets. Continued strength in these markets is expected to drive its sales volumes in 2021. The company also remains focused on growing new business revenues from innovation.
The company also remains focused on growing new business revenues from innovation. In particular, the company’s Advanced Materials segment has a number of products that are driving new business revenues.
Moreover, the company is taking an aggressive approach to cost management in the wake of the pandemic. These initiatives include reduction of discretionary spending. The company reduced costs by roughly $150 million in 2020. It is also on track with its cost-cutting actions in 2021, which are expected to contribute to its earnings per share. The company expects to benefit from lower operating costs from its operational transformation program in the second quarter of 2021.
Eastman Chemical also remains committed to maintaining a disciplined approach to capital allocation, with an emphasis on financing its dividend and debt reduction. The company returned $134 million to its shareholders through dividends and share repurchases during the first quarter of 2021. It expects to buyback shares worth roughly $350 million in 2021. Eastman Chemical also anticipates free cash flow to approach $1.1 billion for 2021.
Eastman Chemical Company Price and Consensus
Eastman Chemical Company price-consensus-chart | Eastman Chemical Company Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Dow Inc. DOW, Nucor Corporation NUE and Cabot Corporation CBT.
Dow has a projected earnings growth rate of roughly 303.6% for the current year. The company’s shares have surged 58% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Nucor has a projected earnings growth rate of 259.9% for the current year. The company’s shares have rallied around 144% in a year. It currently sports a Zacks Rank #1.
Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have shot up 59% in the past year. It currently carries a Zacks Rank #2.
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