Eastman Chemical Company
) has raised its quarterly cash dividend to 30 cents a share from
26 cents, representing a roughly 15% increase. This lifts the
company's annual dividend to $1.20 per share from the prior
payout of $1.04. The revised quarterly dividend is payable on
December 31, 2012, to shareholders of record as of December 17,
This represents the Tennessee-based company's third cash dividend
increase in two years and represents a testimony of its ability
to generate healthy cash flows and earnings growth. Eastman
Chemical's free cash flow rocketed nearly two-and-a-half-fold
year over year to $197 million in third-quarter 2012. The company
recently said that it expects to generate more than $2 billion in
free cash flows between 2012 and 2015.
Eastman Chemical's diversified chemical portfolio, along with its
integrated and diverse downstream businesses, is driving
earnings. The company's third quarter adjusted earnings of $1.57
a share topped the Zacks Consensus Estimate of $1.42. Revenues
jumped 25% year over year to $2,259 million riding on the
contributions of Solutia acquisition.
Eastman Chemical saw growth across all geographic regions in the
quarter. The company raised its adjusted earnings forecast for
2012 to a range of $5.30 to $5.40 a share from its earlier view
of $5.30. It expects earnings to grow to roughly $6.25 in 2013
and $8.00 in 2015. The bottom line is expected to be boosted by
growth of products sold in tires and coatings markets.
Eastman Chemical's diversified chemical portfolio and integrated
and diverse downstream businesses represents the pillars of
strength. The company should benefit from increased capacity
additions, business restructuring and cost-cutting measures.
However, the company is expected to witness a sluggish fourth
quarter and raw material costs pressure. Lower pricing represents
Eastman Chemical, which competes with
The Dow Chemical Company
EI DuPont de Nemours and Company
), currently retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.
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