Eastman Chemical to Post Q1 Earnings: What's in Store for EMN?

Eastman Chemical Company EMN is scheduled to release first-quarter 2025 results after the closing bell on April 24.

EMN surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of around 11.7% on average. EMN pulled off an earnings surprise of 18.4% in the previous reported quarter.

In the first quarter, the company is likely to have gained from its innovation-focused growth strategy and efforts to reduce costs and boost productivity amid challenges due to weak demand in certain markets.

EMN stock has lost 20.7% in the past year compared with the Zacks Chemicals Diversified industry’s 28.3% decline.

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

What Do EMN's Revenue Estimates Say?

The Zacks Consensus Estimate for revenues for EMN for the to-be-reported quarter is pinned at $2,320.1 million, suggesting a year-over-year rise of 0.4%.

Our estimate for EMN’s Additives and Functional Products division’s revenues is pegged at $703.3 million, suggesting a decline of 0.1% year over year. The same for the Advanced Materials unit’s revenues is $763.7 million, indicating an increase of 2.1%.

Our estimate for the Chemical Intermediates segment’s revenues is pinned at $533.5 million, suggesting a year-over-year rise of 2%. The same for the Fiber segment stands at $325 million, indicating a decrease of 1.8%.

Factors at Play for EMN 

Innovation and market development initiatives are expected to have aided EMN in the first quarter. Eastman is targeting growth in new business revenue through its innovation-driven strategy. Initiatives focused on innovation and expanding market presence are expected to support sales volumes. The company’s specialty product portfolio is anticipated to fuel revenue growth across major sectors, including consumer durables, building & construction and transportation. For 2025, EMN anticipates increased volumes in its specialty businesses, supported by its continued emphasis on innovation.

Eastman is expected to benefit from the revenues and earnings generated by its Kingsport methanolysis facility, which is projected to lead to an additional $75–$100 million in EBITDA in 2025 compared to the previous year, driven by the ramp-up of existing customers and new business wins. The Advanced Materials division is also expected to contribute $50–$75 million in incremental EBITDA.

Eastman's cost-cutting initiatives are anticipated to have benefited it in the first quarter. The company is seeing positive impacts from its cost management strategies. Lower operational expenses are expected due to its transformation initiatives, while improved pricing and declining raw material and energy costs are likely to have aided profitability. Eastman is actively working to reduce structural costs to mitigate the effects of inflation while continuing to invest in long-term growth and value creation. These cost and productivity measures are projected to drive $50 million of earnings growth in 2025.

Eastman Chemical is experiencing headwinds from subdued demand in specific markets. The company is expected to have faced continued softness in the building & construction sector, along with cautious purchasing patterns from customers in consumer durables and electronics. In most regions, demand within the building & construction market is likely to have stayed weak.

Despite a lower interest rate environment, it hasn’t translated into stronger demand growth. The automotive sector is also expected to have remained under pressure due to a decline in global vehicle production. These demand-related challenges are likely to have had a negative impact on Eastman’s revenue performance in the first quarter.

What Our Model Unveils for EMN 

Our proven model does not conclusively predict an earnings beat for EMN this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for EMN is -1.01%. The Zacks Consensus Estimate for the first quarter is currently pegged at $1.88. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: EMN currently carries a Zacks Rank #4 (Sell).

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Basic Materials Stocks That Warrant a Look

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

Methanex Corporation MEOH, slated to release earnings on April 30, has an Earnings ESP of +4.74% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for MEOH’s earnings for the first quarter is currently pegged at $1.25.

ATI Inc. ATI, slated to release earnings on May 1, has an Earnings ESP of +2.46% and carries a Zacks Rank #3 at present.

The consensus mark for ATI’s first-quarter earnings is currently pegged at 58 cents.

Kinross Gold Corporation KGC, scheduled to release first-quarter earnings on May 6, has an Earnings ESP of +18.07%.

The Zacks Consensus Estimate for Kinross Gold's earnings for the first quarter is currently pegged at 21 cents. KGC currently carries a Zacks Rank #3.

 

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This article originally published on Zacks Investment Research (zacks.com).

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