Quick Update for Eastman Chemical Company (EMN) Investors

Eastman Chemical Company logged a -0.8% change during today's afternoon session, and is now trading at a price of $80.11 per share.

Eastman Chemical Company returned losses of -20.9% last year, with its stock price reaching a high of $112.78 and a low of $69.91. Over the same period, the stock underperformed the S&P 500 index by -24.0%. As of April 2023, the company's 50-day average price was $82.12. Eastman Chemical Company operates as a specialty materials company in the United States and internationally. Based in Kingsport, TN, the large-cap Industrials company has 14,500 full time employees. Eastman Chemical Company has offered a 3.8% dividend yield over the last 12 months.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $9,273 $8,473 $10,476 $10,580
Gross Margins 24.1% 23.3% 23.9% 20.2%
Operating Margins 14.1% 12.9% 13.8% 10.8%
Net Margins 8.19% 5.64% 8.18% 7.5%
Net Income (MM) $759 $478 $857 $793
Net Interest Income -$218,000 -$210,000 -$198,000 -$182,000
Depreciation & Amort. -$611,000 -$574,000 -$538,000 -$477,000
Earnings Per Share $5.48 $3.5 $6.25 $5.67
EPS Growth n/a -36.13% 78.57% -9.28%
Diluted Shares (MM) 138 136 137 119
Free Cash Flow (MM) $1,079 $1,072 $1,041 $351
Capital Expenditures (MM) -$425 -$383 -$578 -$624
Net Current Assets (MM) -$6,655 -$6,434 -$5,085 -$5,653
Current Ratio 1.86 1.74 1.56 1.16
Long Term Debt (MM) $5,611 $5,269 $4,412 $4,025
Net Debt / EBITDA 3.23 3.88 2.6 2.85

Eastman Chemical Company has growing revenues and increasing reinvestment in the business, wider gross margins than its peer group, and average operating margins with a negative growth trend. However, Eastman Chemical Company has EPS growth acheived by reducing the number of outstanding shares, a deteriorating pattern of cash flows, and a highly leveraged balance sheet. Finally, we note that Eastman Chemical Company has just enough current assets to cover current liabilities.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Eastman Chemical Company has a trailing twelve month P/E ratio of 14.5, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $9.04, the company has a forward P/E ratio of 9.1. The 10.5% compound average growth rate of Eastman Chemical Company's historical and projected earnings per share yields a PEG ratio of 1.38. This implies that the shares are fairly valued. In contrast, the market is likely undervaluing Eastman Chemical Company in terms of its equity because its P/B ratio is 1.84 while the sector average is 3.78. The company's shares are currently trading 12.0% above their Graham number.

Eastman Chemical Company Has an Average Rating of Buy:

The 21 analysts following Eastman Chemical Company have set target prices ranging from $80.0 to $115.0 per share, for an average of $95.67 with a buy rating. As of April 2023, the company is trading -14.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Eastman Chemical Company has a very low short interest because 1.9% of the company's shares are sold short. Institutions own 86.2% of the company's shares, and the insider ownership rate stands at 0.69%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 13% stake in the company is worth $1,201,189,296.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.