Eastman Chemical Company (NYSE:EMN) is a global specialty chemical company that produces chemicals fibers and plastics. Shares in the company have dropped by over 10% after it slightly missed analyst estimates for its 2nd quarter of 2014.
EMN Revenue (5 Year Growth) data by YCharts
Eastman Chemical has a 5 year revenue growth rate of 6.81%. Last year's revenue was $9.35 billion, giving the company a price to sales ratio of 1.3 at the current market cap of $11.81 billion. This is slightly higher than its 5 year average p/s ratio of 1.1. Average analyst estimates for revenue in the current fiscal year stand at $9.57 billion, which would be an increase of 2.35%. The forward price to sales ratio for the company is 1.2
In its most recent fiscal year, EMN had earnings per share of $6.44 (excluding non-core or non-recurring items), which gives it a price to earnings ratio of 12.30 at the current price per share of $79.20. For the current fiscal year, analysts are expecting EPS of $6.89, which would be an increase of 6.99%. In its most recent quarterly report, the company said it expected to have between $6.70 and $7.00 in earnings per share in the current fiscal year. Eastman Chemical's net income growth rate stands at 27.48%.
Dividends and share repurchases
EMN currently pays a $0.35 quarterly dividend which at the current price per share yields 1.77%. The dividend is growing at quite a reasonable pace, with a 5 year growth rate of 7.27%. The payout ratio is quite low at only 17.90% over the past 4 quarters, giving the company plenty of room for dividend increases.
Eastman Chemical has spent $520 million on share repurchases in the 4 most recent quarters, which is 4.40% of the current market cap.
EMN has $2.99 billion in current assets, $1.35 billion of which is in the form of inventories. The current liabilities stand at $1.27 billion, giving the company a very reasonable current ratio of 2.35 with a quick ratio of 1.29. The company has $175 million in cash, which is $1.17 for each of the 149 million shares. The long term debt has increased from only $1.60 billion at the end of fiscal year 2008 to $4.77 billion today, due to the company expanding at a rapid pace.
EMN is growing its revenue and earnings per share at a decent rate, and although the 1.77% isn't extremely high, the very low payout ratio means there's a lot of room for dividend growth. The company spends a lot of funds on stock buybacks, and as long as it's trading at a price to earnings ratio that well below its 5 year average, I see this as being very positive for the shareholders. I feel the recent drop in share price might be a great opportunity to pick up some shares.
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