(EMN) Eastman Chemical Company – Strong ROE of 22.46%
Eastman Chemical Company (EMN) expects to see 20% earnings growth as the recovery takes hold. EMN is trading with a forward P/E of 14.03.
Company Description
Eastman Chemical manufactures chemicals, fibers and plastics materials from 11 manufacturing facilities around the world.
The company has 5 business segments: Coatings, Adhesives, Specialty Polymers and Inks; Fibers; Performance Polymers; Performance Chemicals and Intermediates; and Specialty Plastics.
Eastman Updated 2009 Guidance
On Nov 17, Eastman Chemical amended its earnings per share guidance for 2009 saying it expected about $3.50 per share excluding charges. The company still expects to deliver 20% annual earnings growth from 2009 through the recovery.
Given the guidance, the 2009 Zacks Consensus Estimate jumped to $3.50 per share from $3.22 in the last 2 months.
Analysts are more bullish about 2010. Earnings are expected to grow 22% to $4.29 from $3.95 per share in 2010.
Eastman Chemical is scheduled to report fourth quarter results on Jan 28.
Eastman Surprised on the Third Quarter By 22.12%
On Oct 22, Eastman Chemical reported its third quarter results and beat the Zacks Consensus by 25 cents. It was the third straight earnings surprise.
Earnings per share were $1.38 compared to the Zacks Consensus of $1.13 per share. This also improved on the $1.33 per share earned in the third quarter of 2008.
Sales, however, fell 21% if you exclude various items revenue in third quarter. Sales were $1.3 billion, down from $1.8 billion in the third quarter of 2008. All operating segments were lower in the quarter due to lower selling prices and a 4% decline in sales volume.
Cash generation remains a priority for Eastman. The company generated $200 million in free cash flow in the third quarter. Eastman Chemical currently pays a dividend, with a yield of 2.90%.
Value Fundamentals
Eastman Chemical is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 2.66. Eastman also has a strong 5-year return on equity (ROE) of 22.46%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
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