Eastman Chemical Company (EMN)

StockSpreadsheet (< 20) Submitted: 7/04/07 5:53 PM : Start Price: $63.83 EMN Score: 6.38

"A global chemical company engaged in the manufacture and sale of a broad portfolio of chemicals, plastics, and fibers. The Companys products and operations are managed and reported in six operating segments."

Average annual sales growth of 6% over the last 6 years. Average annual EPS growth of 5% over the past 8 years, though EPS has been highly cyclical during that timeframe and fell fairly sharply last year and first quarter this year. The pretax profit margin fell last year after rising the previous two years. The EPS/book value fell last year after rising the previous 3 years. The debt-to-equity ratio has fallen during each of the past 3 years and the first quarter this year. The current P/E is above the trailing 3 year average, which is of some concern. The payout ratio, at 39%, is reasonable, so the dividend, currently yielding 2.7%, is probably secure. The trailing 8 year average PEG ratio is a very high 2.65, which is of concern. I think this company could hit $89.00 in five years, or about 1/3 higher than its current price of $66.82. Even with the good 2.7% yield, I would not add to positions at this level, but this would be a stock OK to hold at this level. If the stock fell below $60.00 a share I would consider that a buying opportunity.

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