| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 65.80 | -3 |
| Intrinsic value (DCF) | 39.40 | -42 |
| Graham-Dodd Method | 6.40 | -91 |
| Graham Formula | 59.30 | -13 |
Eastman Chemical Company (0IF3.L) is a leading global specialty materials company headquartered in Kingsport, Tennessee, with a diversified portfolio serving multiple high-growth industries. Operating through four key segments—Additives & Functional Products, Advanced Materials, Chemical Intermediates, and Fibers—Eastman provides innovative solutions for transportation, building and construction, healthcare, agriculture, and electronics markets. The company's product range includes hydrocarbon resins, specialty polymers, copolyesters, cellulose acetate fibers, and non-phthalate plasticizers, catering to sustainability-driven demand in sectors like filtration, packaging, and renewable energy. With a century-long legacy since its 1920 founding, Eastman combines deep chemical expertise with R&D capabilities to develop performance materials addressing modern challenges like circular economy needs. Listed on the London Stock Exchange with a $9.2B market cap, Eastman maintains a global footprint while leveraging its US manufacturing base and technological leadership in areas like bio-based materials and PVB interlayers for automotive safety glass.
Eastman Chemical presents a mixed investment profile with strengths in specialty material diversification but faces cyclical and cost pressures. The company's $9.4B revenue and $905M net income (9.6% margin) reflect stable demand in niche markets, supported by $1.3B operating cash flow that funds its 4.4% dividend yield. However, its 1.3 beta indicates above-market volatility, and $5B debt against $837M cash suggests moderate leverage. Growth potential lies in sustainable material solutions like cellulosic biopolymers and non-phthalate plasticizers, aligned with regulatory trends. Risks include raw material inflation (particularly in petrochemical inputs), exposure to automotive/construction cycles, and capex requirements ($599M in 2024) for innovation. The stock may appeal to investors seeking industrial material exposure with ESG-aligned product lines, but requires monitoring of intermediate chemical spreads and substitution risks in traditional fiber markets.
Eastman competes through technology-driven differentiation in specialty chemicals, particularly in high-performance polymers and sustainable alternatives. Its competitive edge stems from: 1) Proprietary cellulose chemistry (notably acetate tow for cigarette filters holding ~50% global share), 2) Leadership in non-phthalate plasticizers through its Eastman 168 line, gaining regulatory advantage in Europe/Asia, 3) Integrated manufacturing allowing cost control in intermediates like acetyl chemicals, and 4) Advanced Materials segment innovations like Tritan copolyester for BPA-free packaging. However, the company faces pressure from larger chemical conglomerates (e.g., Dow, BASF) with greater scale in commoditized products, and from Asian producers in price-sensitive segments. Eastman's strategic focus on less cyclical specialty applications (e.g., medical polymers, aviation fluids) provides some insulation but creates R&D dependency—its 5% R&D-to-sales ratio exceeds commodity peers. The Fibers segment remains vulnerable to secular decline in cigarette consumption, though diversification into industrial acetate applications mitigates this. Geographic concentration (55% US revenue) presents both tariff advantages and missed EM growth opportunities versus global peers.