Eastman Chemical (EMN) To Post Q3 Earnings: What's In Store?

Eastman Chemical Company (NYSE:EMN) is set to release third-quarter 2019 results after the closing bell on Oct 24. The chemical maker’s earnings are likely to have benefited from its cost management and pricing actions. However, a difficult global business environment and weak demand might have impacted its sales volumes in the quarter.

Eastman Chemical missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters while beat once. In this timeframe, the company delivered an average negative surprise of roughly 5.8%.

Shares of the Eastman Chemical are down 8.3% over a year, outperforming the 28.2% decline of its industry.

Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Eastman Chemical for the third quarter is currently pegged at $2,366 million, indicating a roughly 7.1% year over year decline.

Revenues from Eastman Chemical’s Additives and Functional Products division are expected to witness an 8% decline year over year as the Zacks Consensus Estimate for the third quarter is pegged at $842 million. Advanced Materials unit’s revenues are expected to fall 3.2% year over year as the Zacks Consensus Estimate for the third quarter is $686 million.

Revenues for the Chemical Intermediates segment are projected to decline 9.2% from the year-ago quarter as the Zacks Consensus Estimate for the third quarter stands at $638 million.

Lastly, revenues for the Fibers segment are expected to remain flat year over year as the Zacks Consensus Estimate is pegged at $221 million for the third quarter.

Factors to Watch For

Benefits of the company’s cost reduction actions and growth in high-margin innovation products are expected to get reflected on third-quarter results. Eastman Chemical remains focused on growing new business revenues from innovations. The company is also taking productivity and cost-cutting actions in the wake of a challenging environment. It is taking a more aggressive approach to cost management this year to keep its manufacturing costs in control.

Moreover, the company’s actions to raise selling prices of its products amid an inflationary environment are also likely to have contributed to its bottom line in the September quarter.

However, weaker demand for the company’s specialty products may have hurt sales volumes in the third quarter. Eastman Chemical is witnessing lower demand for its specialty products in China due to the U.S.-China trade conflict. Trade-related pressures have impacted consumer discretionary markets such as automotive and consumer durables across China and Europe.

Eastman Chemical, in its second-quarter earnings call, said that it does not expect underlying macroeconomic conditions to improve in second-half 2019 due to challenging global business environment as a result of the trade conflict.

Moreover, weak acetate tow sales volumes due to soft demand are likely to have hurt performance in the fiber segment in the third quarter. Trade-related issues are affecting demand, hurting tow volumes.

Zacks Model

Our proven model does not conclusively predict that Eastman Chemical is likely to beat the Zacks Consensus Estimate this quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Eastman Chemical is +0.10%. The Zacks Consensus Estimate for the third quarter currently stands at $1.99. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Eastman Chemical carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies in the basic materials space that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Agnico Eagle Mines Limited (NYSE:AEM) , scheduled to release earnings on Oct 23, has an Earnings ESP of +7.93% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold Corporation (NYSE:KGC) , scheduled to release earnings on Nov 6, has an Earnings ESP of +25.93% and carries a Zacks Rank #1.

Newmont Goldcorp Corporation (NYSE:NEM) , scheduled to release earnings on Nov 5, has an Earnings ESP of +3.13% and carries a Zacks Rank #2.

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