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Eastman Chemical (EMN) Q4 Earnings, Revenues Beat Estimates

Eastman ChemicalEMN saw higher profits on a reported basis in the fourth quarter of 2016, aided by its cost management actions and growth of its high-margin products. The chemical maker recorded profit (as reported) of $128 million or 87 cents per share, up from $124 million or 83 cents per share recorded a year ago.

Barring one-time items, earnings were $1.51 per share for the quarter, down from $1.59 per share in the year ago-quarter. Earnings, however, topped the Zacks Consensus Estimate of $1.48.

Revenues fell around 2% year over year to $2,188 million in the quarter, but beat the Zacks Consensus Estimate of $2,151 million. The decline was mainly due to lower prices and reduced Fibers sales volume that more than offset higher sales volume in other segments.

For full-year 2016, the company posted profit of $866 million or $5.84 per share, up from $848 million or $5.66 per share in 2015.

Revenues for the full year fell roughly 7% year over year to $9,008 million.

Eastman Chemical Company Price, Consensus and EPS Surprise

Eastman Chemical Company Price, Consensus and EPS Surprise | Eastman Chemical Company Quote

Segment Review

Revenues from the Additives and Functional Products division went down 2% year over year to $720 million in the reported quarter. The decline was mainly due to lower selling prices as a result of reduced raw material and energy costs.

Revenues from the Advanced Materials unit was flat year over year at $584 million as higher sales volume of premium products offset lower selling prices due to reduced raw material and energy costs.

Chemical Intermediates sales rose 10% to $643 million on the back of higher sales volume of olefin-based and functional amines products.

Fibers segment sales slid 27% to $230 million due to reduced sales volume and lower selling prices, in particular, for acetate tow.

Financials

Eastman Chemical ended 2016 with cash and cash equivalents of $181 million, down roughly 38% year over year. Total debt fell roughly 6% year over year to $6.6 billion. Eastman Chemical generated operating cash flows of $1.4 billion for 2016. The company returned $417 million to shareholders through $272 million of dividends and $145 million of share repurchases in 2016.

Outlook

Moving ahead, Eastman Chemical said that it should gain from its strong portfolio of specialty businesses and growth of its high-value specialty products amid an uncertain global operating environment. The company sees adjusted earnings per share growth for 2017 to be 8%-12%.

Eastman Chemical has outperformed the Zacks categorized Chemicals-Diversified industry over the past three months. The company's shares have gained around 19.6% over this period, compared with roughly 13.4% gain recorded by the industry.

Eastman Chemical is a Zacks Rank #3 (Hold) stock.

Stocks to Consider

Better-ranked companies in the chemical space include BASF SE BASFY , Methanex Corporation MEOH and Kronos Worldwide, Inc. KRO , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

BASF has an expected long-term growth of 7.7%.

Methanex has an expected long-term growth of 15%.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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