Eastman Chemical Scales New 52-Week High: What's Driving It?

Shares of chemical maker, Eastman Chemical (NYSE:EMN) touched a fresh 52-week high of $82.94 last Friday, before pulling back to close the day at $82.56.

Eastman Chemical has a market cap of roughly $12 billion and average volume of shares traded in the last three months is around 1,149.8K. The company has an expected long-term EPS growth of around 7.9%.

Eastman Chemical has outperformed the Zacks categorized Chemicals-Diversified industry over the past three months. The company’s shares have gained around 6.4% over this period, compared with roughly 3.1% gain recorded by the industry. Eastman Chemical is gaining from its cost-reduction actions and growth of its high margin products.

Driving Factors

Eastman Chemical expects to drive growth on the back of innovation and high margin products amid an uncertain global business environment. The company expects adjusted earnings per share to grow 8–12% this year.

Eastman Chemical remains focused on cost-cutting and productivity actions which are expected to contribute around 50 cents to earnings per share in 2017. The company is looking to deliver $100 million of cost savings in 2017.

Moreover, Eastman Chemical remains committed to cut debt and enhance shareholder returns leveraging healthy free cash flows. The company expects to generate solid free cash flow in 2017. It also expects to return around $650 million to its shareholders in 2017.

Eastman Chemical is also gaining from synergies of acquisitions, especially Taminco Corporation. The purchase of Taminco has reinforced the company’s foothold in attractive niche end-markets including food, feed and agriculture where Taminco has a strong presence. The acquisition has also provided attractive cost and revenue synergy opportunities. The acquisition of Solutia also represents a significant step in the company’s strategy to boost its foothold in the emerging markets, especially in Asia Pacific.

Moreover, Eastman Chemical is seeing strong adoption of the Tritan copolyester product line, which is poised to be a major contributor to the company’s future growth. The product is approaching $300 million in annual sales since its launch in 2007. The company is doubling Tritan capacity at its Kingsport facility to support its growth.

Eastman Chemical currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other well-placed companies in the chemicals space include Huntsman Corporation (NYSE:HUN) , Kronos Worldwide, Inc. (NYSE:KRO) and The Chemours Company (NYSE:CC) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has an expected long-term earnings growth of 7%.

Kronos has an expected long-term earnings growth of 5%.

Chemours has an expected long-term earnings growth of 15.5%.

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