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Eastman Chemical Hits New 52-Week High on Upbeat Prospects

Shares of Eastman Chemical Company EMN scaled a fresh 52-week high of $106.32 on Mar 6, before eventually closing the day at $105.82.
Eastman Chemical has a market cap of roughly $15.1 billion. Average volume of shares traded in the last three months is around 1,252K. The company has an expected long-term earnings per share (EPS) growth of 8.9%.
The company has an impressive earnings surprise history as it topped the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 17.7%.
Shares of Eastman Chemical have moved up 35.1% over a year, outperforming the industry’s 14.9% growth.
Driving Factors
In the fourth quarter, Eastman Chemical’s reported earnings of $1.62 per share, up from $1.51 in the year ago-quarter. The results surpassed the Zacks Consensus Estimate of $1.06. Revenues rose around 8% year over year to $2,362 million, outpacing the Zacks Consensus Estimate of $2,289.5 million.
Annual estimates for Eastman Chemical have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 3.2% to $8.47 per share. The Zacks Consensus Estimate for 2019 has also moved up roughly 2.9% over the same time frame to $9.24.
In 2018, the company expects to drive growth on the back of investments, innovation and high margin products. It also sees modestly lower tax rate to support earnings growth in 2018. Eastman Chemical anticipates raw material and energy prices, especially for olefins, to be volatile this year. The company expects adjusted EPS growth in 2018 to be 8-12% year over year.
Eastman Chemical remains focused on cost-cutting and productivity actions, which is helping it to offset raw material cost inflation and other cost headwinds. The company expects to deliver $100 million of cost savings in 2018 under its cost-reduction program. Its cost-reduction actions are expected to contribute to its earnings per share in 2018.
The company should also gain from its strategic acquisitions, especially Taminco. Further, it remains committed to reduce debt and boost shareholder returns leveraging strong free cash flows. Eastman Chemical returned more than $646 million to shareholders during 2017 leveraging healthy free cash flows.
Eastman Chemical Company Price and Consensus

Zacks Rank & Other Stocks to Consider

Eastman Chemical has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the chemical space are LyondellBasell Industries N.V. LYB, Arkema S.A. ARKAY and Methanex Corporation MEOH.
LyondellBasell has an expected long-term earnings growth rate of 9% and sports a Zacks Rank #1 (Strong Buy). The company’s shares have moved up 22.2% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arkema has an expected long-term earnings growth rate of 8% and flaunts a Zacks Rank #1. The company’s shares have moved up 39.6% in a year.
Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2. Its shares have gained 16.7% over a year.
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