Eastman Chemical to Report Q2 Earnings: What's in Store?

Eastman Chemical Company EMN is scheduled to release second-quarter 2024 results after the closing bell on Jul 25.

The company surpassed Zacks Consensus Estimate for earnings in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of around 5% on average. EMN pulled off an earnings surprise of 14.2% in the last reported quarter.

Eastman is expected to have benefited from cost-cutting and productivity initiatives, as well as its innovation-driven growth strategy. However, soft demand in certain markets is likely to have weighed on its second-quarter performance.

The stock has gained 12.6% in the past year compared with the industry's fall of 10%.

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

Zacks Model

Our proven model predicts an earnings beat for EMN 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 +0.29%. The Zacks Consensus Estimate for the second quarter is currently pegged at $1.99.

Zacks Rank: Eastman Chemical currently carries a Zacks Rank #3.

What Do the Estimates Say?

The Zacks Consensus Estimate for sales for the to-be-reported quarter is currently pegged at $2,369.3 million, which implies a rise of around 1.9% from the year-ago reported number.

Our estimate for EMN's Additives and Functional Products division's revenues is pegged at $715.3 million, suggesting a fall of 4.3% year over year. The same for the Advanced Materials unit's revenues is $733.8 million, indicating a decline of 0.7%.

Our estimate for the Chemical Intermediates segment's revenues is pinned at $515.5 million, suggesting a year-over-year rise of 0.3%. The same for the Fiber segment stands at $371.5 million, indicating an increase of 15% year over year.

Some Factors to Watch

Eastman's cost-cutting initiatives are anticipated to have benefited the company in the June quarter. It is expected to have gained from its operational transformation efforts, which are likely to have resulted in lower operating costs.

EMN is taking action to keep its manufacturing and administrative costs in control. It achieved cost savings of around $200 million in 2023, net of inflation.  The company also plans to maintain pricing discipline and improve asset utilization throughout this year. Pricing initiatives and lower raw material and energy costs are also expected to have supported its bottom line.

Moreover, Eastman's goal is to increase new business revenues by utilizing its innovation-driven growth strategy. Its sales volumes are likely to have been aided by innovation and market development initiatives.

However, EMN is exposed to headwinds from weak demand and continued de-stocking in specific markets. Lingering effects from customer inventory de-stocking across certain markets are expected to have impacted its performance. The company, on its first-quarter call, said that it sees uncertain primary demand in key markets and regions through the remainder of 2024. It expects continued de-stocking in medical and agriculture in the second quarter. EMN also sees soft demand in building & construction in most regions and cautious customer behavior in consumer durables and electronics.

Stocks That Warrant a Look

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

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Jul 31, has an Earnings ESP of +6.31% and carries a Zacks Rank #2.

The consensus estimate for AEM's earnings for the second quarter is currently pegged at 86 cents.

ATI Inc. ATI, slated to release earnings on Aug 6, has an Earnings ESP of +3.50% and carries a Zacks Rank #3 at present.

The consensus mark for ATI's second-quarter earnings currently stands at 58 cents.

Kinross Gold Corporation KGC, scheduled to release second-quarter earnings on Jul 31, has an Earnings ESP of +12.78%.

The Zacks Consensus Estimate for Kinross Gold's earnings for the second quarter is currently pegged at 13 cents. KGC currently carries a Zacks Rank #1.

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