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Eastman Chemical's Huge Cash Flows And Buyback Support Much Higher Stock Price

Feb. 28, 2023 12:32 AM ETEastman Chemical Company (EMN)8 Comments


  • Eastman Chemical has a higher-quality business than your average chemical industry company.
  • Management treats shareholders well. The company is eating up tons of its own stock and pays a healthy 3.7% dividend yield on top.
  • Shares are already priced to reflect a sizable recessionary impact. The stock would have dramatic upside in a potential economic "soft-landing" scenario.
  • Looking for a helping hand in the market? Members of Ian's Insider Corner get exclusive ideas and guidance to navigate any climate. Learn More »

Innovations in medicine Abstract Molecular Structure


I've written about Eastman Chemical (NYSE:EMN) several times over the years. The business fascinates me in part due to its origin story. The company came about as a spinoff from the former photography giant Eastman Kodak. Kodak divested its

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This article was written by

Ian Bezek profile picture

Ian Bezek is a former hedge fund analyst at Kerrisdale Capital. He has spent the decade living in Latin America, doing the boots-on-the ground research for investors interested in markets such as Mexico, Colombia, and Chile. He also specializes in high-quality compounders and growth stocks at reasonable prices in the US and other developed markets.

Ian leads the investing group Learn more .

Analyst’s Disclosure: I/we have a beneficial long position in the shares of EMN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (8)

fhbecker profile picture
Thanks Ian, I liked this one. Just sold 2 PUTS on it;
$85 9/15/2023 for $6.80 and
$85 6/16/2023 for $5.00
On 6/16 I will either have 100 EMN for $80.01 or have earned 20.9% on the cash the PUT tied up.
On 9/15 I will either have 100 EMN for $78.21 or have earned 15.9% on the cash the PUT tied up.
909 profile picture
Ian -- how did you take the 4Q rev & earnings miss?
Ian Bezek profile picture
@909 I'm expecting 2023 to be down a bit, as per the analyst forecasts. Stock price is reflecting a weak 2024 as well, whereas there will be considerable upside if things pick back up after this year.
BM Cashflow Detective profile picture
Eastman Chemical has a nice risk-adjusted 3y total return potential of around 16% CAGR.

(9.60% annualized consensus growth + fwd dividend yield 3.77% + 2.63% annualized value return)

Long $EMN

If the chemistry is right, the intention to buy is also right.
Ian Bezek profile picture
@BM Cashflow Detective Yep, seems pretty reasonable to expect a mid-teens annualized return next few years from this starting price.
All true, but in the covid crisis the share went down a lot more. I am long, after your articles on the stock three years ago.
Ian Bezek profile picture
@carlosartorius Eastman fell 50% during the pandemic (for a few weeks) but recovered all its losses within three months.

It's fallen 35% from the 2021 peak now. Pretty steep drawdown already, but if we shut down the world economy again, it could drop more I guess.
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