Intrinsic value of Eastman Chemical - EMN

Previous Close

$85.27

  Intrinsic Value

$62.92

stock screener

  Rating & Target

sell

-26%

  Value-price divergence*

-44%

Previous close

$85.27

 
Intrinsic value

$62.92

 
Up/down potential

-26%

 
Rating

sell

 
Value-price divergence*

-44%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of EMN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.63
  3.00
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
Revenue, $m
  9,008
  9,278
  9,575
  9,899
  10,249
  10,627
  11,033
  11,468
  11,931
  12,425
  12,950
  13,507
  14,098
  14,723
  15,385
  16,083
  16,821
  17,600
  18,421
  19,287
  20,199
  21,160
  22,172
  23,237
  24,357
  25,536
  26,777
  28,081
  29,452
  30,894
  32,410
Variable operating expenses, $m
 
  7,938
  8,178
  8,439
  8,722
  9,027
  9,355
  9,706
  10,080
  10,479
  10,903
  10,907
  11,384
  11,889
  12,423
  12,987
  13,583
  14,212
  14,875
  15,574
  16,310
  17,086
  17,903
  18,763
  19,668
  20,620
  21,622
  22,675
  23,782
  24,946
  26,170
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,710
  7,938
  8,178
  8,439
  8,722
  9,027
  9,355
  9,706
  10,080
  10,479
  10,903
  10,907
  11,384
  11,889
  12,423
  12,987
  13,583
  14,212
  14,875
  15,574
  16,310
  17,086
  17,903
  18,763
  19,668
  20,620
  21,622
  22,675
  23,782
  24,946
  26,170
Operating income, $m
  1,298
  1,340
  1,397
  1,460
  1,527
  1,600
  1,678
  1,762
  1,851
  1,946
  2,047
  2,600
  2,714
  2,835
  2,962
  3,096
  3,238
  3,388
  3,547
  3,713
  3,889
  4,074
  4,269
  4,474
  4,689
  4,916
  5,155
  5,406
  5,670
  5,948
  6,240
EBITDA, $m
  1,878
  2,165
  2,235
  2,310
  2,392
  2,480
  2,575
  2,676
  2,784
  2,900
  3,022
  3,152
  3,290
  3,436
  3,590
  3,753
  3,926
  4,107
  4,299
  4,501
  4,714
  4,938
  5,174
  5,423
  5,684
  5,960
  6,249
  6,553
  6,873
  7,210
  7,564
Interest expense (income), $m
  280
  263
  276
  290
  306
  323
  342
  361
  383
  405
  429
  455
  482
  511
  542
  574
  608
  644
  682
  722
  765
  809
  856
  906
  958
  1,012
  1,070
  1,131
  1,194
  1,261
  1,332
Earnings before tax, $m
  1,049
  1,077
  1,122
  1,169
  1,221
  1,277
  1,336
  1,400
  1,468
  1,541
  1,618
  2,145
  2,232
  2,323
  2,420
  2,522
  2,630
  2,744
  2,864
  2,991
  3,124
  3,265
  3,412
  3,568
  3,732
  3,904
  4,085
  4,276
  4,476
  4,687
  4,908
Tax expense, $m
  190
  291
  303
  316
  330
  345
  361
  378
  396
  416
  437
  579
  603
  627
  653
  681
  710
  741
  773
  808
  844
  881
  921
  963
  1,008
  1,054
  1,103
  1,154
  1,209
  1,265
  1,325
Net income, $m
  854
  786
  819
  854
  891
  932
  976
  1,022
  1,072
  1,125
  1,181
  1,566
  1,629
  1,696
  1,767
  1,841
  1,920
  2,003
  2,091
  2,183
  2,281
  2,383
  2,491
  2,605
  2,724
  2,850
  2,982
  3,121
  3,267
  3,421
  3,583

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  181
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,457
  15,726
  16,229
  16,778
  17,372
  18,013
  18,700
  19,437
  20,223
  21,060
  21,949
  22,894
  23,895
  24,955
  26,075
  27,260
  28,511
  29,831
  31,223
  32,690
  34,236
  35,865
  37,579
  39,384
  41,284
  43,282
  45,384
  47,595
  49,919
  52,363
  54,932
Adjusted assets (=assets-cash), $m
  15,276
  15,726
  16,229
  16,778
  17,372
  18,013
  18,700
  19,437
  20,223
  21,060
  21,949
  22,894
  23,895
  24,955
  26,075
  27,260
  28,511
  29,831
  31,223
  32,690
  34,236
  35,865
  37,579
  39,384
  41,284
  43,282
  45,384
  47,595
  49,919
  52,363
  54,932
Revenue / Adjusted assets
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
Average production assets, $m
  7,763
  7,998
  8,254
  8,533
  8,835
  9,161
  9,511
  9,885
  10,285
  10,710
  11,163
  11,643
  12,152
  12,691
  13,261
  13,864
  14,500
  15,171
  15,879
  16,625
  17,412
  18,240
  19,112
  20,030
  20,996
  22,012
  23,081
  24,206
  25,388
  26,631
  27,937
Working capital, $m
  1,071
  1,206
  1,245
  1,287
  1,332
  1,382
  1,434
  1,491
  1,551
  1,615
  1,684
  1,756
  1,833
  1,914
  2,000
  2,091
  2,187
  2,288
  2,395
  2,507
  2,626
  2,751
  2,882
  3,021
  3,166
  3,320
  3,481
  3,651
  3,829
  4,016
  4,213
Total debt, $m
  6,594
  6,724
  7,078
  7,464
  7,881
  8,332
  8,815
  9,333
  9,885
  10,474
  11,099
  11,763
  12,467
  13,212
  14,000
  14,833
  15,712
  16,640
  17,618
  18,650
  19,737
  20,882
  22,087
  23,356
  24,692
  26,096
  27,574
  29,128
  30,762
  32,480
  34,286
Total liabilities, $m
  10,925
  11,055
  11,409
  11,795
  12,212
  12,663
  13,146
  13,664
  14,216
  14,805
  15,430
  16,094
  16,798
  17,543
  18,331
  19,164
  20,043
  20,971
  21,949
  22,981
  24,068
  25,213
  26,418
  27,687
  29,023
  30,427
  31,905
  33,459
  35,093
  36,811
  38,617
Total equity, $m
  4,532
  4,671
  4,820
  4,983
  5,159
  5,350
  5,554
  5,773
  6,006
  6,255
  6,519
  6,799
  7,097
  7,412
  7,744
  8,096
  8,468
  8,860
  9,273
  9,709
  10,168
  10,652
  11,161
  11,697
  12,261
  12,855
  13,479
  14,136
  14,826
  15,552
  16,315
Total liabilities and equity, $m
  15,457
  15,726
  16,229
  16,778
  17,371
  18,013
  18,700
  19,437
  20,222
  21,060
  21,949
  22,893
  23,895
  24,955
  26,075
  27,260
  28,511
  29,831
  31,222
  32,690
  34,236
  35,865
  37,579
  39,384
  41,284
  43,282
  45,384
  47,595
  49,919
  52,363
  54,932
Debt-to-equity ratio
  1.455
  1.440
  1.470
  1.500
  1.530
  1.560
  1.590
  1.620
  1.650
  1.670
  1.700
  1.730
  1.760
  1.780
  1.810
  1.830
  1.860
  1.880
  1.900
  1.920
  1.940
  1.960
  1.980
  2.000
  2.010
  2.030
  2.050
  2.060
  2.070
  2.090
  2.100
Adjusted equity ratio
  0.285
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  854
  786
  819
  854
  891
  932
  976
  1,022
  1,072
  1,125
  1,181
  1,566
  1,629
  1,696
  1,767
  1,841
  1,920
  2,003
  2,091
  2,183
  2,281
  2,383
  2,491
  2,605
  2,724
  2,850
  2,982
  3,121
  3,267
  3,421
  3,583
Depreciation, amort., depletion, $m
  580
  825
  837
  850
  865
  880
  897
  915
  934
  954
  975
  552
  576
  601
  629
  657
  687
  719
  753
  788
  825
  864
  906
  949
  995
  1,043
  1,094
  1,147
  1,203
  1,262
  1,324
Funds from operations, $m
  1,292
  1,612
  1,656
  1,704
  1,756
  1,812
  1,872
  1,937
  2,005
  2,078
  2,156
  2,118
  2,205
  2,298
  2,395
  2,498
  2,607
  2,722
  2,843
  2,971
  3,106
  3,248
  3,397
  3,554
  3,719
  3,893
  4,076
  4,268
  4,471
  4,683
  4,907
Change in working capital, $m
  -93
  35
  39
  42
  46
  49
  53
  56
  60
  64
  68
  72
  77
  81
  86
  91
  96
  101
  107
  113
  119
  125
  132
  138
  146
  153
  161
  170
  178
  187
  197
Cash from operations, $m
  1,385
  1,576
  1,617
  1,662
  1,711
  1,763
  1,820
  1,880
  1,945
  2,014
  2,088
  2,046
  2,128
  2,216
  2,309
  2,408
  2,511
  2,621
  2,737
  2,859
  2,987
  3,123
  3,265
  3,416
  3,574
  3,740
  3,915
  4,099
  4,292
  4,496
  4,710
Maintenance CAPEX, $m
  0
  -368
  -379
  -391
  -404
  -419
  -434
  -451
  -468
  -487
  -508
  -529
  -552
  -576
  -601
  -629
  -657
  -687
  -719
  -753
  -788
  -825
  -864
  -906
  -949
  -995
  -1,043
  -1,094
  -1,147
  -1,203
  -1,262
New CAPEX, $m
  -626
  -235
  -256
  -279
  -302
  -326
  -350
  -374
  -400
  -426
  -453
  -480
  -509
  -539
  -570
  -602
  -636
  -671
  -708
  -746
  -786
  -828
  -872
  -918
  -966
  -1,016
  -1,069
  -1,124
  -1,182
  -1,243
  -1,306
Cash from investing activities, $m
  -655
  -603
  -635
  -670
  -706
  -745
  -784
  -825
  -868
  -913
  -961
  -1,009
  -1,061
  -1,115
  -1,171
  -1,231
  -1,293
  -1,358
  -1,427
  -1,499
  -1,574
  -1,653
  -1,736
  -1,824
  -1,915
  -2,011
  -2,112
  -2,218
  -2,329
  -2,446
  -2,568
Free cash flow, $m
  730
  973
  982
  992
  1,004
  1,019
  1,036
  1,055
  1,077
  1,101
  1,128
  1,036
  1,068
  1,101
  1,138
  1,177
  1,218
  1,263
  1,310
  1,360
  1,413
  1,469
  1,529
  1,592
  1,658
  1,728
  1,803
  1,881
  1,963
  2,050
  2,141
Issuance/(repayment) of debt, $m
  -428
  311
  354
  386
  418
  450
  484
  518
  552
  588
  626
  664
  704
  745
  788
  833
  879
  928
  979
  1,032
  1,087
  1,145
  1,205
  1,269
  1,335
  1,405
  1,478
  1,554
  1,634
  1,718
  1,806
Issuance/(repurchase) of shares, $m
  -130
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -566
  311
  354
  386
  418
  450
  484
  518
  552
  588
  626
  664
  704
  745
  788
  833
  879
  928
  979
  1,032
  1,087
  1,145
  1,205
  1,269
  1,335
  1,405
  1,478
  1,554
  1,634
  1,718
  1,806
Total cash flow (excl. dividends), $m
  160
  1,284
  1,336
  1,378
  1,422
  1,469
  1,519
  1,573
  1,629
  1,690
  1,753
  1,700
  1,771
  1,846
  1,926
  2,009
  2,098
  2,190
  2,288
  2,391
  2,500
  2,614
  2,734
  2,861
  2,994
  3,133
  3,280
  3,435
  3,597
  3,768
  3,947
Retained Cash Flow (-), $m
  -591
  -139
  -149
  -163
  -176
  -190
  -204
  -219
  -233
  -249
  -264
  -280
  -297
  -315
  -333
  -352
  -371
  -392
  -413
  -436
  -459
  -484
  -509
  -536
  -564
  -594
  -624
  -657
  -690
  -726
  -763
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,146
  1,187
  1,215
  1,245
  1,279
  1,315
  1,354
  1,396
  1,441
  1,489
  1,420
  1,474
  1,532
  1,593
  1,658
  1,726
  1,798
  1,875
  1,956
  2,041
  2,130
  2,225
  2,325
  2,429
  2,540
  2,656
  2,778
  2,907
  3,042
  3,184
Discount rate, %
 
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
 
  1,057
  1,002
  931
  859
  786
  714
  642
  571
  503
  437
  346
  294
  247
  203
  165
  131
  103
  79
  59
  43
  31
  22
  15
  10
  6
  4
  2
  1
  1
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Eastman Chemical Company manufactures and sells materials, specialty additives, chemicals, and fibers in the United States and internationally. The company’s Additives & Functional Products segment offers specialty coalescents, specialty and commodity solvents, paint additives, and specialty polymers; hydrocarbon and rosin resins; sulfur and antidegradant rubber additives; performance resins and amine-derivative-based building blocks; heat transfer and aviation fluids; formic-acid based solutions; and metam based soil fumigants, thiram and ziram based fungicides, and plant growth regulators. Its products are used in coatings, tires, consumables, building and construction, animal nutrition, care chemical, crop protection, and energy markets. Its Advanced Materials segment provides copolyesters, cellulose esters, polyvinyl butyral (PVB) sheets, specialty (PVB) intermediates, and window film and protective film products for value-added end uses in transportation, consumables, building and construction, durable goods, and health and wellness products. The company’s Chemical Intermediates segment offers Olefin derivatives, acetyls, ethylene, and commodity solvents; primary non-phthalate and phthala plasticizers, and a range of niche non- phthalate plasticizers; and methylamines and salts higher amines and solvents used in industrial chemicals and processing, building and construction, health and wellness, and agrochemicals markets. Its Fibers segment offers Estron acetate tow and Estrobond triacetin plasticizers for manufacturing cigarette filters; Estron natural and Chromspun solution dyed acetate yarns for use in apparel, home furnishings, and industrial fabrics; and cellulose acetate flake and acetyl raw materials for other acetate fiber producers, as well as acetyl chemical products. The company also offers aviation turbine engine oil; wet-laid nonwovens; and specialty films. Eastman Chemical Company was founded in 1920 and is headquartered in Kingsport, Tennessee.

FINANCIAL RATIOS  of  Eastman Chemical (EMN)

Valuation Ratios
P/E Ratio 14.6
Price to Sales 1.4
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 9
Price to Free Cash Flow 16.5
Growth Rates
Sales Growth Rate -6.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4%
Cap. Spend. - 3 Yr. Gr. Rate 5.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 139.3%
Total Debt to Equity 145.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 7%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 7.7%
Ret/ On T. Cap. - 3 Yr. Avg. 7.8%
Return On Equity 20.2%
Return On Equity - 3 Yr. Avg. 21.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 26.1%
Gross Margin - 3 Yr. Avg. 25.4%
EBITDA Margin 21.2%
EBITDA Margin - 3 Yr. Avg. 19.5%
Operating Margin 14.4%
Oper. Margin - 3 Yr. Avg. 13.7%
Pre-Tax Margin 11.6%
Pre-Tax Margin - 3 Yr. Avg. 11.2%
Net Profit Margin 9.5%
Net Profit Margin - 3 Yr. Avg. 8.7%
Effective Tax Rate 18.1%
Eff/ Tax Rate - 3 Yr. Avg. 22.1%
Payout Ratio 31.9%

EMN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EMN stock intrinsic value calculation we used $9008 million for the last fiscal year's total revenue generated by Eastman Chemical. The default revenue input number comes from 2016 income statement of Eastman Chemical. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our EMN stock valuation model: a) initial revenue growth rate of 3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.4%, whose default value for EMN is calculated based on our internal credit rating of Eastman Chemical, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Eastman Chemical.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of EMN stock the variable cost ratio is equal to 85.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for EMN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for Eastman Chemical.

Corporate tax rate of 27% is the nominal tax rate for Eastman Chemical. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the EMN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for EMN are equal to 86.2%.

Life of production assets of 21.1 years is the average useful life of capital assets used in Eastman Chemical operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for EMN is equal to 13%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4532 million for Eastman Chemical - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 147.293 million for Eastman Chemical is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Eastman Chemical at the current share price and the inputted number of shares is $12.6 billion.

RELATED COMPANIES Price Int.Val. Rating
CE Celanese Serie 98.16 17.77  str.sell
LYB LyondellBasell 87.66 608.04  str.buy
WLK Westlake Chemi 71.03 428.49  str.buy
KRA Kraton 34.37 25.58  sell
DOW Dow Chemical 63.94 208.93  str.buy
TSE Trinseo 60.80 208.28  str.buy
HUN Huntsman 25.64 6.48  str.sell

COMPANY NEWS

▶ Eastman Board Declares Dividend   [Aug-03-17 03:53PM  GlobeNewswire]
▶ Eastman Issues 2017 Sustainability Report   [12:56PM  GlobeNewswire]
▶ Eastman Chemical tops Street 2Q forecasts   [Jul-27-17 10:08PM  Associated Press]
▶ Where Eastman Chemical Plans Its Next Price Hike   [Jul-18-17 09:08AM  Market Realist]
▶ Why Eastman Chemical Is Trading at a Premium to Its Peers   [Jul-10-17 09:06AM  Market Realist]
▶ Why Eastman Chemicals Debt Is Headed South   [12:06PM  Market Realist]
▶ What Are Celaneses Latest Valuations?   [Jul-03-17 09:08AM  Market Realist]
▶ Why LyondellBasell Is Trading at a Discount to Peers   [Jun-29-17 09:07AM  Market Realist]
▶ The top 25% in a year   [Jun-19-17 01:54PM  CNBC Videos]
▶ Analysts Latest Recommendations for Eastman Chemical   [Jun-01-17 10:38AM  Market Realist]
▶ Eastman Chemicals Stock Performance in 2017   [07:39AM  Market Realist]
▶ Eastman to Expand Performance Films Capacity   [May-30-17 02:27PM  GlobeNewswire]
▶ Eastman Chemical Comes Up with Treva, a New Bioplastic   [May-23-17 07:39AM  Market Realist]
▶ Eastman Board Declares Dividend   [11:42AM  GlobeNewswire]
▶ Eastman Chemical Raises Esters Prices   [May-01-17 01:05PM  Market Realist]
▶ [$$] Settlement Would Have Companies Pay Millions for Chemical Spill   [Apr-28-17 03:46PM  The Wall Street Journal]
▶ Eastman Chemical tops Street 1Q forecasts   [Apr-27-17 05:06PM  Associated Press]
▶ What Are Dow Chemicals Valuations ahead of 1Q17 Earnings?   [Apr-21-17 09:06AM  Market Realist]
▶ Worker's widow: Company was negligent in plant explosion   [Apr-20-17 03:03PM  Associated Press]
▶ Inside Eastman Chemicals Latest Valuations   [Mar-30-17 09:07AM  Market Realist]
▶ Chemicals Industry Stock Outlook - March 2017   [Mar-29-17 03:46PM  Investopedia]
▶ Eastman Chemicals Dividend Yield in Context   [02:35PM  Market Realist]
Stock chart of EMN Financial statements of EMN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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