Assessing Eastman Chemical After 2025 Selloff and Specialty Materials Recycling Push

• Wondering if Eastman Chemical is a beaten down value play or a value trap at current levels? You are not alone. This article aims to unpack exactly that.
• With the share price around $60.66 and down 31.5% year to date and 37.8% over the past year, the market has clearly reset its expectations and is forcing investors to rethink the risk reward profile.
• Recent headlines have focused on Eastman’s strategic push into specialty materials and circular recycling initiatives, alongside ongoing portfolio optimization moves that aim to simplify the business and improve margins. Together, these developments help explain why sentiment has swung as investors weigh long term structural opportunities against near term uncertainty.
• Despite the weak share price, Eastman scores a solid 5/6 on our valuation checks. This suggests it screens as undervalued on most fronts. In the sections that follow we will walk through those valuation methods, and then finish with a more holistic way to think about what the stock is really worth.

Find out why Eastman Chemical's -37.8% return over the last year is lagging behind its peers.

Approach 1: Eastman Chemical Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it can generate in the future and then discounting those cash flows back to their value in today’s dollars.

For Eastman Chemical, the latest twelve month free cash flow is about $330.8 Million. Analysts provide explicit forecasts for the next few years. From 2026 onwards Simply Wall St extrapolates those estimates, with projected free cash flow rising to roughly $1.04 Billion by 2035 as growth gradually moderates. These projections are all converted into today’s value using a required rate of return, reflecting risk and the time value of money.

Adding up these discounted cash flows produces an estimated intrinsic value of about $118.92 per share. Compared with the current share price around $60.66, the model implies the stock is trading at roughly a 49.0% discount to its DCF value. This suggests the market is pricing in significantly weaker long term performance than the cash flow outlook assumes.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Eastman Chemical is undervalued by 49.0%. Track this in your watchlist or portfolio, or discover 914 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Eastman Chemical.

Approach 2: Eastman Chemical Price vs Earnings

For a mature, profitable business like Eastman Chemical, the price to earnings ratio is a practical way to gauge value because it directly connects what investors pay today with the company’s current earnings power. In general, faster growth and lower perceived risk justify a higher normal or fair PE ratio, while slower growth or higher uncertainty argue for a lower one.

Eastman currently trades on a PE of about 9.9x, which is well below both the Chemicals industry average of roughly 23.0x and the peer average of about 19.7x. However, simple comparisons can be misleading because they ignore company specific factors. That is why Simply Wall St uses a Fair Ratio, its proprietary estimate of the PE multiple Eastman should trade on once you factor in its earnings growth outlook, profitability, industry, market cap and risk profile.

For Eastman, this Fair Ratio is 20.1x. This suggests the shares appear to trade at a meaningful discount to where they might reasonably sit based on fundamentals, even after allowing for the risks the market is worried about.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Eastman Chemical Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Eastman Chemical’s future with a financial forecast and a clear, data backed fair value.

A Narrative is your story behind the numbers, where you set assumptions about revenue, earnings and margins, and Simply Wall St turns that perspective into a full forecast and a fair value estimate that you can compare directly with today’s share price to help inform your decision.

Available in the Community section of Simply Wall St, and used by millions of investors, Narratives are easy to create, update automatically when new earnings or news arrive, and help you see how different viewpoints translate into different fair values.

For example, one Narrative on Eastman might lean into cost savings, molecular recycling growth and margin expansion to support a fair value near the most optimistic analyst target of about $100. A more cautious Narrative might focus on weak demand, trade risks and slower adoption of new products and land closer to the most conservative target around $60, giving you a clear, side by side view of what you believe and what that implies the stock is worth.

Do you think there's more to the story for Eastman Chemical? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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