Eastman Chemical -7.5% as profit rises but revenues grow less than expected


Eastman Chemical (EMN -7.5%) slumps to three-month lows after Q2 revenues of $2.46B rose less than 1% Y/Y and fell short of analyst consensus expectations.

Q2 results were hurt by an unplanned shutdown at its Kingsport, Tenn., operations and a decrease in sales volume resulting from a Q1 weather-related outage at the Longview, Tex., site; EMN's specialty fluids and intermediates segment impacted by both events reported lower sales and adjusted operating earnings.

Gross margin fell to 26.7% from 27.7%.

Comments (2)
  • jkthomas56
    , contributor
    Comments (3) | Send Message
     
    Investors must be idiots. The two events that caused revenue growth to fall short have been known and talked about for some time. They act like it was a surprise. I am happy to see positive growth in spite of those events and that earnings didn't take a dive. Seems that investors are looking for reasons to sell now. Is this the turn in sentiment everyone has been predicting? This is certainly a great opportunity to buy a solid company. Thank you Mr. Market, I'll have a hard time not acting on your shortsightedness.
    29 Jul 2014, 07:49 PM Reply Like
  • teejii
    , contributor
    Comments (171) | Send Message
     
    Agreed. EMN is a classic case of "don't buy the gold diggers, buy the guys that produce the stuff that gold diggers need". That means the car industry and all the related stuff, aerospace industry, general industry, building industry and everybody else who need the stuff the chemical companies make.

     

    IMHO EMN has demonstrated that they can successfully invest capital to create more revenues in the long run. It's hard not to see a nice prospect to do so in the future as well and the dividends increased as well at a nice pace. Even better if they get "another" Solutia.

     

    Extrapolated from the current quarter operating cash flow yield is something in the ball park of 13%, which I'll take any day. Even if there's a down cycle there's some margin of safety, I don't think with Solutia they are going down to anywhere near where they were pre-2012.
    30 Jul 2014, 06:22 PM Reply Like
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