Eastman Chemical Company (NYSE: EMN) manufactures
and markets chemicals, fibers and plastics. Key products include coatings, adhesives, specialty plastics, cellulose acetate fibers, polyethylene terephthalate polymers for packaging, and intermediates based on oxo and acetyl chemistries. The company has operations in 23 countries and employees 11,000. Dow Chemical (NYSE: DOW) is a major competitor.
Eastman surprised investors late last month, when it reported Q4 EPS of $1.27 and revenues of $1.74 billion. Analysts had been expecting $1.11 and $1.67 billion. Management also guided Q1 EPS above $1.19 ($1.19 consensus) and estimated FY08 EPS of $5.06 ($4.92 consensus).
EMN shares
popped on the news and then began defining a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys", one "buy" and six "holds". The EMN Price to Sales ratio (0.79), Price to Book ratio (2.57), Price to Cash Flow ratio (8.36) and EPS Growth rate (27.00%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 84% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $56.31 and $72.44. A stop-loss of $57.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in the stocks mentioned above.
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