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Eastman Chemical (EMN) to Post Q3 Earnings: What's in Store?

Eastman Chemical Company EMN is set to release third-quarter 2020 results after the closing bell on Oct 29. The company’s earnings are likely to have benefited from its cost management actions. However, weak demand due to the coronavirus pandemic might have impacted its performance in the quarter.

Eastman Chemical beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice. For this timeframe, the company delivered an earnings surprise of 1.2%, on average.

Shares of Eastman Chemical are up 7% year to date, compared with a 0.2% decline of its industry.

 


 

 

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for Eastman Chemical this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Eastman Chemical is +0.89%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $1.40. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Eastman Chemical currently carries a Zacks Rank #2.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Eastman Chemical for the third quarter is currently pinned at $2,101 million, indicating a 9.6% year-over-year decline.

Moreover, the Zacks Consensus Estimate for Eastman Chemical’s Additives and Functional Products division revenues is pegged at $751 million, suggesting a 9.7% decline year over year. The consensus estimate for Advanced Materials unit’s revenues is $649 million, indicating a fall of 6.9% year over year.

The Zacks Consensus Estimate for the Chemical Intermediates segment’s revenues stands at $487 million, indicating a 15.9% decline from the year-ago quarter. The same for the Fibers segment is pegged at $207 million, calling for a 4.6% year-over-year decline.

Factors to Watch For

Benefits of cost actions are expected to get reflected on third-quarter results. Eastman Chemical is focused on productivity and cost-cutting actions in the wake of a challenging environment. The company is taking an aggressive approach to cost management in response to the coronavirus pandemic. It has significantly increased its cost reduction target, which is forecast to be roughly $150 million of net savings in 2020. These cost actions include reduction of discretionary spending.

Eastman Chemical is also focused on growing new business revenues from innovation. The company is likely to have gained from growth in high-margin innovation products in the third quarter. The company’s actions to raise selling prices of its products are also likely to have contributed to its bottom line in the quarter to be reported.

However, demand weakness in certain markets might have affected the company’s sales volumes in the third quarter. Softness across end-markets including transportation and textiles is likely to have continued in the quarter amid the pandemic.

Moreover, the company is expected to have faced some headwinds from higher maintenance spending in the third quarter. Increased maintenance shutdowns are likely to have weighed on margins in the Chemical Intermediates segment in the September quarter.

Eastman Chemical Company Price and EPS Surprise

 

Eastman Chemical Company Price and EPS Surprise

Eastman Chemical Company price-eps-surprise | Eastman Chemical Company Quote

 

Other Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Bunge Limited BG, scheduled to release earnings on Oct 28, has an Earnings ESP of +30.00% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman Corporation HUN, scheduled to release earnings on Oct 29, has an Earnings ESP of +13.51% and carries a Zacks Rank #2.

Newmont Corporation NEM, scheduled to release earnings on Oct 29, has an Earnings ESP of +1.90% and carries a Zacks Rank #2.

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Newmont Corporation (NEM): Free Stock Analysis Report
 
Huntsman Corporation (HUN): Free Stock Analysis Report
 
Bunge Limited (BG): Free Stock Analysis Report
 
Eastman Chemical Company (EMN): Free Stock Analysis Report
 
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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.

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