13. Eastman Chemical Company (NYSE:EMN)
Number of Hedge Fund Holders In Q2 2024: 28
Average Analyst EPS % Revision: 0.5%
Eastman Chemical Company (NYSE:EMN) is a diversified chemical company that caters to the needs of construction, aviation, pharmaceutical, aviation, agriculture, and other industries. The industrial focus of its business means that it is exposed to economic headwinds that slow down industrial production. Consequently, Eastman Chemical Company (NYSE:EMN)’s shares are up by a modest 25% year to date, with 11 percentage points of these gains having come in September. In fact, September has been a great month for Eastman Chemical Company (NYSE:EMN)’s shares with the stock having gained 9%. The chemical company benefits from a low rate environment that increases industrial output, and Eastman Chemical Company (NYSE:EMN)’s hypothesis is also dependent on its ability to spur polyester recycling. The firm has opened a new plant for this in Tennessee, and another facility in Texas is expected to help big ticket firms like Pepsi meet their recycled materials needs. Additionally, since a slow industrial economy has led to inventory buildups over the past few quarters, Eastman Chemical Company (NYSE:EMN) is likely to benefit from higher de stocking and inventory replenishment moving forward.
Eastman Chemical Company (NYSE:EMN)’s management commented on industry inventory levels during the Q2 2024 earnings call. Here is what they said:
“So when you look at sort of where we are with the Tritan market, a lot of that goes in consumer durables as everyone I think in the industry has called out that market’s been weak. It continues to be weak. But we did see a significant amount of return in volume with the end of destocking. So a huge amount of the hit that we took in 2023 was associated with destocking. That volume has come back and the very high margins that go with it are certainly very helpful this year and will be going forward. We also continue to have a lot of wins just on the traditional value proposition of Tritan. So when you look at the compelling attributes of its heat resistance, its chemical resistance, its clarity, it being a safe product that’s BPA free.
We’ve always had a lot of volume wins in applications that’s driven tremendous growth in this product area for over a decade. That engine’s back in gear this year. We’re winning on those value propositions a variety of places on top of end of destocking that’s giving us good momentum. And then on top of that, we’re now layering on recycled content. And for a lot of brands, that’s really important. We have a lot of customers that have been with us for a long time that are using this recycled content claim as a way to enhance their product offering or drive new volume growth like P&G, NowGene, [indiscernible], LVMH, and L’Oreal, Estee Lauder, etc. You’ve seen the icon chart of all the customers we’ve had who are using in one form or another. And then we’ve — what’s really exciting is also opening up new markets for us to serve that wouldn’t have originally been available for our value proposition.”
