1
2
3
Company Current Weight Recommended Weight
Eastman Chemicals
0.97%
0.485%
Ecolab
1.11%
1.11%
Teck Resources
0.66%
1.145%
2.74%
4
Market Profile 52 – Week Range Founded in 1920, Eastman Chemical
(Eastman), is headquartered in
Kingsport and is a global specialty
chemical company that produces a
broad range of high-quality products
and serves customers in
approximately 100 countries.
$70.38 -­‐ $90.55 P/E 12.02 Price / Book 3.20 Dividend Yield 1.70% ROE 28.43% ROA 7.83% Market Cap. 12.63B Institutional Holdings 84.10% Shares Outstanding 148.48M Book Value / Share 26.27 Cash / Share 1.43 Beta 1.70 Source : Yahoo! Finance 5
1.  Additives & Functional Products Segment (AFP)
Coatings, tires and building constructions
2.  Adhesives & Plasticizers Segment (A&P)
Industrial chemicals, internal use
3.  Advanced Materials Segment (AM)
End-use products, durable goods, health & wellness products
4.  Fibers Segment
Cigarette filters, home furnishings
5.  Specialty Fluids & Intermediates Segment (SFI)
Industrial chemicals, external use
6
Segment
Revenue
AFP
1.7 B
A&P
1.3 B
AM
2.3 B
Fibers
1.4 B
SFI
2.5 B
SFI, 27% AFP, 18% A & P, 14% Fibers, 16% AM, 25% 7
8
9
Ticker P/E TTM P/S TTM P/B P/CF TTM EV/ EBITDA TTM Average 18.85 1.38 3.65 37.41 9.67 EMN 12.80 1.36 3.22 15.27 7.36 DOW 19.06 1.10 2.81 9.54 11.67 CE 10.62 1.43 3.21 22.81 8.32 DD 18.12 1.72 3.58 46.38 12.49 LYB 14.68 1.34 5.35 13.88 9.41 Absolute Valuation Current #Your Target Multiple Target/ Current Expected EPS Target Price P/E 12.76 18.85 1.48 8.00 150.80 P/B 3.22 3.65 1.13 8.00 94.60 P/S 1.36 1.38 1.01 8.00 84.56 P/EBITDA 5.46 8.15 1.49 8.00 124.74 10
Eastman Chemical (EMN)
Year
Revenue
% Growth
Operating Income
Operating Margin
Taxes
Tax Rate
Net Income
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
% Grow th
Current Price
Implied equity value/share
Upside/(Downside) to DCF
2014E
2015E
Terminal Discount Rate = Termical FCF Growth Rate = 2016E
2017E
2018E
11.0%
4.0%
2019E
2020E
2021E
2022E
2023E
9,606 10,368 10,969 11,737 12,559 13,438 14,244 15,099 15,929 16,646
7.9%
5.8%
7.0%
7.0%
7.0%
6.0%
6.0%
5.5%
4.5%
1,538 1,697 1,935 1,995 2,135 2,217 2,279 2,265 2,310 2,414
16.0%
16.4%
17.6%
17.0%
17.0%
16.5%
16.0%
15.0%
14.5%
14.5%
461 509 580 599 640 665 684 679 693 724
30.0%
30.0%
30.0%
30.0%
30.0%
30.0%
30.0%
30.0%
30.0%
30.0%
1,077 1,188 1,354 1,397 1,494 1,552 1,595 1,585 1,617 1,690
10.3%
14.0%
3.1%
7.0%
3.9%
2.8%
-­‐0.6%
2.0%
4.5%
144 156 165 176 188 202 214 226 239 250
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
(20) 12 (176) (141) (151) (161) (171) (181) (191) (200)
-­‐0.2%
0.1%
-­‐1.6%
-­‐1.2%
-­‐1.2%
-­‐1.2%
-­‐1.2%
-­‐1.2%
-­‐1.2%
-­‐1.2%
480 518 548 352 377 269 285 302 319 333
5.0%
5.0%
5.0%
3.0%
3.0%
2.0%
2.0%
2.0%
2.0%
2.0%
721 837 795 1,080 1,155 1,324 1,353 1,329 1,346 1,407
16.2%
-­‐5.1%
35.9%
7.0%
14.6%
2.2%
-­‐1.8%
1.3%
4.5%
$ 82.92
$ 89.05
7.4%
11
Terminal2
Growth2
Rate
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
4.00%
4.25%
4.50%
4.75%
10.00%
91.41
93.20
95.12
97.18
99.41
101.80
104.40
107.23
110.31
113.69
10.25%
88.27
89.92
91.67
93.56
95.58
97.75
100.10
102.65
105.42
108.44
10.50%
85.34
86.85
88.46
90.18
92.02
94.00
96.14
98.44
100.93
103.65
Terminal2Discount2Rate
10.75%
11.00%
11.25%
82.58
79.99
77.55
83.97
81.27
78.73
85.45
82.63
79.99
87.03
84.08
81.32
88.71
85.63
82.74
90.52
87.28
84.25
92.46
89.05
85.87
94.55
90.95
87.61
96.81
93.00
89.47
99.25
95.21
91.48
11.50%
75.24
76.34
77.50
78.73
80.03
81.43
82.91
84.50
86.20
88.02
11.75%
73.06
74.08
75.15
76.29
77.49
78.78
80.14
81.59
83.15
84.82
12.00%
71.00
71.94
72.94
73.99
75.10
76.29
77.54
78.88
80.30
81.83
12
Company Overview:
Ecolab Inc. was founded and
headquartered in St. Paul Minnesota
during 1923. Ecolab provides unique
products and services to customers
in a variety of industries and market.
Ecolab prides itself on being able to
fix customer specific problems with
specialized goods and services.
Current Price Upside Potential As of 11/31
108.95
10.14%
Market Profile
52 -­‐ Week Range
Price / Earnings
Price / Book
Price / Sales
Dividend Yield
ROE
ROA
Market Cap. Shares Outstanding Beta
Price Target
Source: Yahoo! Finance
97.65 -­‐ 118.46
27.75
4.25
2.31
1.00%
6.31%
15.99%
31.30B
305.1M 0.6
$120.00
13
14
15
Travis Vincent
Terminal Discount Rate =
11.5%
Terminal FCF Growth =
3.0%
11/31/2014
Year
Revenue
2014E
2015E
2016E
2017E
2018E
2019E
2020E
2021E
2022E
2023E
2024E
14,844
16,625
18,620
20,668
22,735
24,781
27,235
29,904
32,685
35,626
38,120
% Growth
12.0%
12.0%
11.0%
10.0%
9.0%
9.9%
9.8%
9.3%
9.0%
7.0%
Operating Income
1,781
2,161
2,176
2,448
2,754
3,099
3,486
3,922
4,412
4,964
5,584
Operating Margin
12.0%
13.0%
11.7%
12.5%
12.5%
12.5%
12.5%
12.5%
12.5%
12.5%
12.5%
Interest and Other
264
266
270
310
341
372
409
449
490
534
572
Interest % of Sales
1.8%
1.6%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
1.5%
410
474
496
556
652
736
831
938
1,059
1,196
1,353
Tax Rate
27.0%
25.0%
26.0%
26.0%
27.0%
27.0%
27.0%
27.0%
27.0%
27.0%
27.0%
Net Income
1,107
1,421
1,411
1,582
1,762
1,991
2,247
2,535
2,863
3,233
3,659
28.4%
-0.8%
12.2%
11.3%
13.0%
12.9%
12.9%
12.9%
12.9%
13.2%
845
773
1,098
537
591
644
708
777
850
926
991
5.7%
4.3%
2.6%
2.6%
2.6%
2.6%
2.6%
2.6%
2.6%
2.6%
2.6%
(564)
(684)
(805)
(785)
(864)
(942)
(1,035)
(1,136)
(1,242)
(1,354)
(1,449)
-3.8%
-4.1%
-4.3%
-3.8%
-3.8%
-3.8%
-3.8%
-3.8%
-3.8%
-3.8%
-3.8%
Subtract Cap Ex
Capex % of sales
(760)
-5.1%
(915)
-5.5%
(1,142)
-6.1%
(951)
-4.6%
(1,046)
-4.6%
(1,115)
-4.5%
(1,089)
-4.0%
(1,196)
-4.0%
(1,307)
-4.0%
(1,354)
-3.8%
(1,563)
-4.1%
Free Cash Flow
2,148
2,425
2,845
2,285
2,535
2,808
3,009
3,373
3,778
4,160
4,764
12.9%
17.3%
-19.7%
10.9%
10.8%
12.1%
12.0%
10.1%
14.5%
Taxes
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
% Growth
Current Price
$ 108.95
Implied equity value/share
$ 120.00
Upside/(Downside) to DCF
10.14%
7.1%
16
Terminal Growth Rate
Sensitivity to DCF
Terminal Discout Rate
10%
2%
137.17 $
2.25% $ 139.83 $
2.50% $ 142.68 $
2.75% $ 145.71 $
10.25%
10.5%
10.75%
11%
11.25%
11.50%
11.75%
12%
132.46 $ 128.04 $ 123.88 $ 126.44 $ 119.96 $
112.76 $ 109.45 $ 106.31
134.91 $ 130.30 $ 125.96 $ 121.89 $ 118.05 $
114.42 $ 111.00 $ 107.75
137.52 $ 132.70 $ 128.18 $ 123.94 $ 119.94 $
116.18 $ 112.63 $ 109.27
140.30 $ 135.26 $ 130.53 $ 126.11 $ 121.95 $
118.03 $ 114.35 $ 110.87
3.00% $ 148.97 $ 143.28 $ 137.98 $ 133.04 $ 128.41 $ 124.07 $
120.00 $ 116.17 $ 112.55
3.25% $ 152.46 $ 146.47 $ 140.90 $ 135.71 $ 130.87 $ 126.33 $
122.08 $ 118.09 $ 114.34
3.50% $ 156.22 $ 149.89 $ 144.02 $ 138.57 $ 133.49 $ 128.74 $
124.30 $ 120.14 $ 116.22
3.75% $ 160.29 $ 153.58 $ 147.38 $ 141.63 $ 136.29 $ 131.31 $
126.66 $ 122.31 $ 118.23
4.00% $ 164.69 $ 157.56 $ 150.99 $ 144.92 $ 139.28 $ 134.05 $
129.17 $ 124.62 $ 120.35
17
18
19
20
21
Ticker
Average
TCK
FCX
BHP
IMN
XTA
HBM
FM
P/E
Current
Year
33.47
26.44
14.16
13.16
N/A
N/A
139.67
21.04
P/S
P/B
P/CF
TTM
2.96
1.48
0.79
2.56
0.44
1.57
3.73
3.39
1.17
0.72
1.57
2.17
N/A
N/A
1.14
1.50
10.09
5.56
6.16
7.10
9.50
10.16
10.43
11.61
EV/
EBITDA
TTM
18.71
7.12
6.15
6.53
N/A
N/A
35.45
11.98
22
Teck Resources Ltd. (TCK)
Analyst: Richard Voigt
Date: 11/28/14
Terminal Discount Rate =
Terminal FCF Growth =
Year
2014E
2015E
2016E
Revenue
8,364
8,994
9,810
% Grow th
7.5%
Operating Income
1,529
Operating Margin
Interest and Other
Interest % of Sales
Taxes
Tax Rate
Net Income
% of Sales
Subtract Cap Ex
5.0%
2,995
12,038
4.5%
3,190
12,579
4.5%
3,359
13,083
4.0%
3,519
2023E
13,606
4.0%
3,687
2024E
14,150
4.0%
3,863
2025E
14,716
4.0%
4,047
2026E
15,305
4.0%
4,239
26.0%
26.5%
26.7%
26.9%
27.1%
27.3%
27.5%
27.7%
(641)
(542)
(589)
(624)
(658)
(691)
(722)
(755)
(785)
(816)
(849)
(883)
(918)
-7.7%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
-6.0%
(342)
(539)
(711)
(761)
(824)
(887)
(950)
(1,003)
(1,053)
(1,105)
(1,160)
(1,218)
(1,279)
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
38.5%
860
1,430
1,135
31.9%
1,589
1,215
7.1%
1,705
1,316
8.3%
1,832
1,417
7.7%
1,947
1,518
7.1%
2,070
1,601
5.5%
2,189
1,682
5.0%
2,316
1,766
5.0%
2,435
1,854
5.0%
2,575
1,946
5.0%
2,708
2,043
5.0%
2,831
15.7%
15.9%
16.2%
16.4%
16.7%
16.9%
17.2%
17.4%
17.7%
17.9%
18.2%
18.4%
18.5%
(277)
(178)
(417)
(364)
(318)
(276)
(241)
(214)
(196)
(177)
(170)
(162)
(153)
-3.3%
-2.0%
-4.2%
-3.5%
-2.9%
-2.4%
-2.0%
-1.7%
-1.5%
-1.3%
-1.2%
-1.1%
Capex % of sales
21.5%
Free Cash Flow
(222)
1,916
21.3%
196
-188.4%
$15.51
$21.37
37.79%
2,798
11,519
2022E
25.5%
1,800
% Grow th
5.5%
2021E
25.0%
1,309
% of Sales
2,600
10,971
2020E
24.8%
57.4%
Plus/(minus) Changes WC
6.0%
2019E
21.6%
546
Add Depreciation/Amort
2,434
10,399
2018E
18.3%
% Grow th
Current Price
Implied $/Share
Upside to DCF
1,941
9.1%
2017E
12.00%
3.50%
2,060
21.0%
2,163
20.8%
2,249
20.5%
2,338
20.3%
2,408
20.0%
247
394
581
749
940
25.9%
59.4%
47.5%
29.0%
25.5%
2,491
19.8%
1,086
15.5%
2,551
19.5%
1,250
15.1%
2,626
19.3%
1,398
11.9%
2,689
19.0%
1,571
12.3%
2,767
18.8%
1,725
9.8%
-1.0%
2,831
18.5%
1,889
9.5%
23
Terminal Growth Rate
$15.51
1.50%
1.75%
2.00%
2.25%
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
4.00%
Terminal Discount Rate
11.25%
11.50%
11.75%
12.00%
12.25%
12.50%
12.75%
13.00%
13.25%
13.50%
13.75%
$20.71
$20.01
$19.35
$18.72
$18.13
$17.56
$17.02
$16.50
$16.01
$15.54
$15.10
$21.04
$20.32
$19.64
$19.00
$18.38
$17.80
$17.24
$16.72
$16.21
$15.73
$15.27
$21.40
$20.66
$19.95
$19.29
$18.65
$18.05
$17.48
$16.94
$16.42
$15.92
$15.45
$21.78
$21.01
$20.28
$19.59
$18.93
$18.31
$17.73
$17.17
$16.63
$16.13
$15.64
$22.18
$21.38
$20.62
$19.91
$19.23
$18.59
$17.98
$17.41
$16.86
$16.34
$15.84
$22.60
$21.77
$20.98
$20.24
$19.54
$18.88
$18.26
$17.66
$17.10
$16.56
$16.05
$23.05
$22.18
$21.37
$20.60
$19.87
$19.19
$18.54
$17.93
$17.35
$16.79
$16.27
$23.52
$22.62
$21.77
$20.97
$20.22
$19.51
$18.84
$18.21
$17.61
$17.04
$16.50
$24.03
$23.09
$22.20
$21.37
$20.59
$19.85
$19.16
$18.50
$17.88
$17.29
$16.73
$24.57
$23.58
$22.66
$21.79
$20.98
$20.21
$19.49
$18.81
$18.17
$17.56
$16.99
$25.15
$24.11
$23.15
$22.24
$21.39
$20.60
$19.85
$19.14
$18.47
$17.84
$17.25
24
25