Kingsport, Tennessee-based Eastman Chemical Company (EMN) is a specialty materials company with a market cap of $7.9 billion. It serves transportation, personal care, wellness, food, feed, agriculture, building and construction, water treatment, energy, consumables, durables, and electronics markets.
This specialty materials company has considerably lagged behind the broader market over the past 52 weeks. Shares of EMN have declined 31.6% over this time frame, while the broader S&P 500 Index ($SPX) has gained 15.2%. Moreover, on a YTD basis, the stock is down 24.6%, compared to SPX’s 10.2% uptick.
Narrowing the focus, EMN has also underperformed the Materials Select Sector SPDR Fund’s (XLB) 1.1% drop over the past 52 weeks and 9.5% rise on a YTD basis.
On Jul. 31, EMN released its Q2 results, and its shares plunged 19% in the following trading session. The company’s revenue declined 3.2% year-over-year to $2.3 billion, but met the consensus estimates. However, its adjusted EPS of $1.60 decreased by a notable 25.6% from the year-ago quarter, missing analyst expectations by 7%. Moreover, its adjusted EBIT fell 22.1% compared to the prior-year quarter to $275 million, raising concerns among investors about EMN’s profitability.
For the current fiscal year, ending in December, analysts expect EMN’s EPS to decline 21.9% year over year to $6.16. The company’s earnings surprise history is mixed. It exceeded the consensus estimates in three of the last four quarters, while missing on another occasion.
Among the 15 analysts covering the stock, the consensus rating is a "Moderate Buy” which is based on eight “Strong Buy,” two "Moderate Buy,” four “Hold,” and one “Strong Sell” rating.
This configuration is less bullish than three months ago, with none of the analysts suggesting a "Strong Sell” rating.
On Aug. 8, The Goldman Sachs Group, Inc. (GS) maintained a “Hold" rating on EMN and set a price target of $65.
The mean price target of $75.20 represents a 9.3% premium from EMN’s current price levels, while the Street-high price target of $86 suggests an ambitious upside potential of 24.9%.
