Eastman Chemical Company
) Board has hiked its quarterly cash dividend by 17% to 35 cents
per share from the prior payout of 30 cents. The increased
dividend will be paid on Jan 2, 2014, to stockholders of record
as of Dec 16, 2013.
Prior to this, on Dec 6, 2012, Eastman Chemical increased its
quarterly cash dividend by 15% to 30 cents per share from the
previous payout of 26 cents. The increased dividend was paid on
Dec 31, 2012, to stockholders of record as of Dec 17, 2012.
Eastman Chemical has now hiked dividend for three years in a
row. This dividend hike testifies the Board's confidence in the
company's ability to generate continued earnings growth and
strong cash flow. Eastman Chemical is committed to maintaining a
strong financial position by executing its strategy to deliver
consistent and superior value.
The dividend hike was backed by Eastman Chemical's healthy
earnings for the third quarter of 2013. The company's adjusted
earnings (from continuing operations) of $1.68 per share for the
reported quarter topped the Zacks Consensus Estimate by 4 cents
and exceeded the year-ago adjusted earnings of $1.57. Strong
performance in Additives and Functional Products and Advanced
Materials divisions drove the better-than-expected earnings.
Eastman Chemical's profit (from continuing operation) doubled
year over year to $308 million or $1.97 a share from $154 million
or 99 cents a share a year ago. The bottom line was boosted by
higher sales and lower costs.
Revenues rose roughly 3% year over year to $2,338 million,
beating the Zacks Consensus Estimate of $2,316 million. Sales
were driven by gains across the Additives and Functional Products
and Advanced Materials divisions, which more than offset the
decline in the Adhesives and Plasticizers division. The company
saw higher sales across all geographic regions in the
The dividend increase is also a testimony to the company's
healthy balance sheet. Eastman Chemical ended the third
quarter with $222 million of cash and generated operating cash
flows of $427 million during the quarter.
Eastman Chemical's diversified chemical portfolio and its
integrated and diverse downstream businesses remain its strength.
The company should continue to benefit from the synergies of its
Solutia acquisition. It also stands to gain from business
restructuring, cost-cutting measures and increased capacity
However, Eastman Chemical, a Zacks Rank #4 (Sell) stock,
remains exposed to raw material cost pressure. Uncertainty
regarding the timing of a recovery in Europe also remains an
Other companies in the chemical space worth considering
Johnson Matthey plc
Asahi Kasei Corp.
). All of them hold a Zacks Rank #1 (Strong Buy).
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