The global specialty chemicals company has "testable improvement at a discount," Jefferies analyst Laurence Alexander said.
"Over the next 12 to 18 months Eastman's discount to its large-cap peers should narrow as the company integrates Taminco Corp. (TAM) , allays concerns over petrochemical and acetate tow headwinds, and delivers an estimated 8.5% free cash flow yield before dividends," Alexander added.
Shares of Eastman closed up 6.57% at $80.78 on Friday.
Separately, TheStreet Ratings team rates EASTMAN CHEMICAL CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EASTMAN CHEMICAL CO (EMN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 3.2%. 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 $560.00 million or 31.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.16%.
- EASTMAN CHEMICAL CO's earnings per share declined by 29.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EASTMAN CHEMICAL CO increased its bottom line by earning $7.45 versus $3.03 in the prior year. For the next year, the market is expecting a contraction of 7.8% in earnings ($6.87 versus $7.45).
- The gross profit margin for EASTMAN CHEMICAL CO is currently lower than what is desirable, coming in at 31.21%. Regardless of EMN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.70% trails the industry average.
- In its most recent trading session, EMN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: EMN Ratings Report