Eastman Chemical Company Stock Buy Recommendation Reiterated (EMN)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Eastman Chemical Company (NYSE: EMN) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.7%. Since the same quarter one year prior, revenues rose by 25.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $440.00 million or 25.00% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.66%.
  • Compared to its closing price of one year ago, EMN's share price has jumped by 25.40%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • EASTMAN CHEMICAL CO has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, EASTMAN CHEMICAL CO reported lower earnings of $3.03 versus $4.21 in the prior year. This year, the market expects an improvement in earnings ($6.40 versus $3.03).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, EASTMAN CHEMICAL CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

Eastman Chemical Company, a specialty chemical company, engages in the manufacture and sale of chemicals, plastics, and fibers in the United States and internationally. Eastman Chemical has a market cap of $10.8 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 24.00, above the S&P 500 P/E ratio of 18.00. Shares are up 1.9% year to date as of the close of trading on Monday.

You can view the full Eastman Chemical Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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