Eastman Chemical Reaches 52-Week High - Analyst Blog

Shares of Eastman Chemical Company EMN hit a new 52-week high of $89.09 on Apr 17 and eventually closed at $88.58. The company's long-term estimated earnings per share EPS growth rate is 8.3%. Average volume of shares traded over the last three months was roughly 1,626K.

Growth Drivers

Eastman Chemical posted strong fourth-quarter 2013 results on strength across its Additives and Functional Products, Advanced Materials and Fibres divisions. The company's adjusted earnings (from continuing operations) of $1.35 per share for the reported quarter surpassed the Zacks Consensus Estimate by 10 cents and exceeded the year-ago adjusted earnings of $1.19 per share.

On a reported basis, Eastman Chemical's earnings (from continuing operation) came in at $2.22 per share compared with a loss of 35 cents in the year-ago quarter.

Revenues rose roughly 4% year over year to $2,265 million in the fourth quarter, beating the Zacks Consensus Estimate of $2,232 million. Revenues were driven by higher sales volumes across the Additives and Functional Products, Advanced Materials and Fibers segments. Eastman Chemical saw higher sales across all geographic regions in the fourth quarter.

The acquisition of Solutia is a strategic fit for Eastman Chemical, as it expanded the company's foothold in the emerging markets, including China, by establishing a more diverse and sustainable product portfolio. It also recognizes the potential for meaningful revenue synergies by leveraging technology and business capabilities and overlapping end markets of both companies, particularly automotive and architecture.

Eastman Chemical has also agreed to acquire the assets of BP BP global aviation turbine engine oil business in Jan 2014. Eastman Chemical's aviation hydraulic fluids will be added to the acquired fluids product portfolio of BP, which will help the company to meet the global aviation industry's needs. The company expects the transaction to immediately add to its full-year 2014 earnings.

Eastman Chemical is committed to maintaining a strong balance sheet and returning excess cash to shareholders. The company's Board approved an additional $1 billion repurchase of its common stock on Feb 20. Moreover, it has raised its quarterly dividend by 17% to 35 cents per share from the previous payout of 30 cents per share in Dec 2013.

The company also benefits from business restructuring, cost-cutting measures and increased capacity additions.

Other Stocks to Consider

Other companies in the chemical industry worth considering include Methanex Corp. MEOH, Huntsman Corp. HUN and LyondellBasell Industries NV LYB. All of them hold a Zacks Rank #2 (Buy).