This is an old version of EMN from 13 days ago (Oct 31, 2026).See the latest version
EMN
- Price
- $66.53
- Discount category
- Below intrinsic value
- Next earnings
- Jan 29, 2027
- Next earnings is estimate
- Yes
- Company name
- Eastman Chemical
- Sector
- Specialty chemicals & materials
- About
- Eastman Chemical is a specialty materials company based in Kingsport, Tennessee. It has four segments. Advanced Materials makes specialty plastics and interlayers for car windshields. Additives & Functional Products makes additives for coatings, care products and agriculture. Fibers makes acetate tow for cigarette filters and textile fibers. Chemical Intermediates makes olefins and other basic chemicals. Eastman also runs a methanolysis plant in Kingsport that breaks down polyester waste into raw materials for new plastics. Sales were $2.39 billion in Q3 2026.
- Thesis
- The market prices Eastman for weak demand in its specialty markets and for gains that it sees as temporary. Demand stays weak in discretionary end markets such as cars, buildings and consumer durables. Fibers earnings fell in 2026 because customers reduced their acetate tow stocks and acetate tow contract prices fell. Much of the earnings growth in 2026 came from Chemical Intermediates, where the conflict in the Middle East disrupted supply and raised spreads. The same conflict raised raw material and distribution costs. In Q3 2026, adjusted EPS fell to $1.84 from $1.97 in Q2, and Eastman lowered its 2026 operating cash flow outlook again, to about $850 million from about $900 million. For the gap to close, three things must be true. Eastman must reach its 2026 outlook of $6.00 to $6.20 adjusted EPS, with higher prices that cover its higher costs. Specialty volumes must grow, with Fibers volumes rising in Q4 2026 as customers buy to meet their annual contracts. Eastman must release working capital in Q4 2026 and keep its cost savings of $125 million to $150 million. The methanolysis plant must keep ramping up and win packaging customers, helped by the $375 million award from the US Department of Energy that Eastman says was reinstated. The full-year report with the 2027 outlook, expected in late January 2027, is the next and main test. The gap can close only over several years, as demand in its end markets recovers. The main reason it may not close is a long period of weak demand for cars, buildings and consumer goods, which Eastman cannot control.
- Risks
- Specialty volumes depend on discretionary end markets such as cars, buildings and consumer durables. Demand in these markets stayed weak in 2026, and Eastman saw softer demand in cars and consumer durables in Q3 2026. A recession would cut volumes further. Chemical Intermediates earnings rose in 2026 because the conflict in the Middle East disrupted supply. When supply returns to normal, spreads and earnings in this segment can fall. The conflict also raised Eastman's raw material and distribution costs, and price increases must keep up with them. Acetate tow demand falls over time as fewer people smoke, and customers reduced their stocks in 2026. Fibers sales fell 11% in the first nine months of 2026, and lower acetate tow contract prices cut Fibers earnings in Q3 2026. The returns on the methanolysis plant depend on demand for recycled content and on prices that customers pay for it. Slow demand would lower the return on this investment.
- Balance sheet
- Cash: $768M Debt: $5.2B Net debt: $4.5B Eastman funds its operations with senior notes, commercial paper and a revolving credit facility. At September 30, 2026, total borrowings were $5.22 billion and cash was $768 million, so net debt was $4.45 billion, up from $4.22 billion at December 31, 2025. In Q1 2026, Eastman issued $600 million of 4.5% notes due February 2031. Its $1.50 billion revolving credit facility matures in February 2031 and backs its commercial paper program. Operating cash flow was $377 million in the first nine months of 2026, and Eastman expects about $850 million for the year, because it expects to release working capital in Q4 2026. Eastman paid $288 million of dividends and bought back no shares in the first nine months of 2026. Its priorities for cash are the dividend, capital spending and an investment-grade balance sheet. As of Sep 30, 2026.
- Checkpoints
- Oct 29, 2026: Q3 2026 earnings: specialty volumes. Failed. Watch: Adjusted EPS near $1.97, higher Advanced Materials and Fibers earnings and a working capital release pass; adjusted EPS well below $1.97 or a lower cash flow outlook fails. Outcome: Adjusted EPS was $1.84, Fibers earnings fell from a year earlier, and Eastman lowered its 2026 operating cash flow outlook to about $850 million. Jan 29, 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: Operating cash flow near $900 million for 2026 and a 2027 outlook for higher specialty earnings pass; an outlook that depends on Chemical Intermediates or shows lower earnings fails.
- Recent events
- Oct 29, 2026: Eastman reported Q3 2026 results. Sales rose 8% to $2.39 billion, with 7% higher prices. Adjusted EPS rose to $1.84 from $1.14 a year earlier, but it was below the $1.97 of Q2 2026. Fibers earnings fell because of lower acetate tow contract prices. Eastman expects 2026 adjusted EPS of $6.00 to $6.20 and lowered its 2026 operating cash flow outlook to about $850 million. It also said that the US Department of Energy reinstated a $375 million award for the scale up of its circular platform. Jul 30, 2026: Eastman reported Q2 2026 results. Sales rose 10% to $2.51 billion, and adjusted EPS rose to $1.97 from $1.60. Chemical Intermediates sales rose 39% on higher volumes and prices, while Fibers sales fell 11%. Eastman expects Q3 2026 adjusted EPS to approach $1.97 and now expects 2026 operating cash flow to approach $900 million. Jul 15, 2026: Officials of the US Environmental Protection Agency visited Eastman's methanolysis plant in Kingsport, Tennessee. May 19, 2026: Eastman received ISO 59014 certification for its circular material recovery.