- Price
- $62.33
- Fair value
- $84.00
- Discount
- 25.8%
- Uncertainty
- High
- LSEG rating
- 2.22
- Moat
- None
- Next earnings
- 2026-10-29
- Next earnings is estimate
- No
- Company name
- Eastman Chemical
- Sector
- Specialty chemicals & materials
- About
- Eastman Chemical is a specialty materials company based in Kingsport, Tennessee. It has four segments. Advanced Materials makes specialty plastics and interlayers for car windshields. Additives & Functional Products makes additives for coatings, care products and agriculture. Fibers makes acetate tow for cigarette filters and textile fibers. Chemical Intermediates makes olefins and other basic chemicals. Eastman also runs a methanolysis plant in Kingsport that breaks down polyester waste into raw materials for new plastics. Sales were $2.51 billion in Q2 2026.
- Thesis
- The market prices Eastman for weak demand in its specialty markets and for gains that it sees as temporary. Demand stays weak in discretionary end markets such as cars, buildings and consumer durables. Fibers sales fell 11% in Q2 2026 because customers reduced their acetate tow stocks and textile demand fell. Much of the earnings growth in 2026 came from Chemical Intermediates, where the conflict in the Middle East disrupted supply and raised spreads, and Eastman expects this effect to lessen. Eastman also lowered its 2026 operating cash flow outlook to about $900 million, because inflation increased accounts receivable. For the gap to close, three things must be true. Q3 2026 adjusted EPS must be near the $1.97 of Q2, as the company expects. Specialty volumes must grow, with Fibers volumes rising as customers buy to meet their annual contracts. Eastman must release working capital in the second half and keep its cost savings of $125 million to $150 million. The methanolysis plant must keep ramping up and win packaging customers. The Q3 2026 report on October 29, 2026 gives the next test. The full-year report and the 2027 outlook in early 2027 are the main tests. The gap can close only over several years, as demand in its end markets recovers. The main reason it may not close is a long period of weak demand for cars, buildings and consumer goods, which Eastman cannot control.
- Risks
- Specialty volumes depend on discretionary end markets such as cars, buildings and consumer durables. Demand in these markets stayed weak in the first half of 2026, and a recession would cut volumes further.
Chemical Intermediates earnings rose in 2026 because the conflict in the Middle East disrupted supply. When supply returns to normal, spreads and earnings in this segment can fall.
Acetate tow demand falls over time as fewer people smoke, and customers reduced their stocks in 2026. Fibers sales fell 11% in Q2 2026.
The returns on the methanolysis plant depend on demand for recycled content and on prices that customers pay for it. Slow demand would lower the return on this investment.
- Balance sheet
- Cash: $691M
Debt: $5.2B
Net debt: $4.5B
Debt due within 12 months: $765M
Eastman funds its operations with senior notes, commercial paper and a revolving credit facility. At June 30, 2026, total borrowings were $5.22 billion: $4.45 billion of long-term borrowings and $765 million due within one year. Cash was $691 million. In Q1 2026, Eastman issued $600 million of 4.5% notes due February 2031. Its $1.50 billion revolving credit facility matures in February 2031 and backs its commercial paper program. Eastman plans capital spending of about $400 million in 2026 and expects to release working capital in the second half of the year. Its priorities for cash are the dividend, capital spending and share buybacks, while it keeps an investment-grade balance sheet.
As of 2026-06-30.
- Checkpoints
- Oct 29, 2026: Q3 2026 earnings: specialty volumes. Pending. Watch: Adjusted EPS near $1.97, higher Advanced Materials and Fibers earnings and a working capital release pass; adjusted EPS well below $1.97 or a lower cash flow outlook fails.
Jan 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: Operating cash flow near $900 million for 2026 and a 2027 outlook for higher specialty earnings pass; an outlook that depends on Chemical Intermediates or shows lower earnings fails.
- Recent events
- 2026-07-30: Eastman reported Q2 2026 results. Sales rose 10% to $2.51 billion, and adjusted EPS rose to $1.97 from $1.60. Chemical Intermediates sales rose 39% on higher volumes and prices, while Fibers sales fell 11%. Eastman expects Q3 2026 adjusted EPS to approach $1.97 and now expects 2026 operating cash flow to approach $900 million.
2026-07-15: Officials of the US Environmental Protection Agency visited Eastman's methanolysis plant in Kingsport, Tennessee.
2026-05-19: Eastman received ISO 59014 certification for its circular material recovery.