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Celanese (CE) Well Poised on Productivity and Growth Actions

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We issued an updated research report on Texas-based chemical company, Celanese Corporation (CE - Free Report) on Nov 17.

Celanese kept its earnings streak alive with a beat in third-quarter 2017. The company logged adjusted earnings per share of $1.93, up 15.6% from $1.67 reported a year ago. The figure was slightly above the Zacks Consensus Estimate of $1.92.

Celanese reported sales of $1,566 million for the quarter, up roughly 18.4% year over year. Sales also beat the Zacks Consensus Estimate of $1,511 million.

Shares of Celanese have moved up 22.9% in the last six months, outperforming the industry’s 15.7% growth.

 



Celanese, during third-quarter 2017 earnings call, said that it expects business and productivity momentum to offset fourth-quarter weakness. Celanese is optimistic that it can grow its adjusted earnings per share for 2017 towards the top end of its earlier announced guidance range of 9-11%.

Celanese’s strategic measures including operational cost savings through productivity actions are likely to lend support to its earnings in 2017. Celanese also remains focused on growth through acquisitions.

The purchase of Italy-based SO.F.TER. Group has strengthened Celanese’s solutions capability and project pipeline. SO.F.TER. Group’s modern manufacturing facilities and product portfolio offer opportunities for additional growth, investment and synergies.

Moreover, the acquisition of Nilit's nylon compounding unit is in line with Celanese’s plans to become a leading nylon compound supplier. The buyout enables Celanese to extend its global leadership position in the engineered materials business as nylon continues to be adopted in automotive, consumer and industrial applications.  

Celanese continues to generate strong cash flows and remains focused on returning value to shareholders. Celanese generated operating cash flow of $255 million and free cash flow of $181 million in third-quarter 2017. During the quarter, the company also returned $262 million to shareholders, including $62 million of dividends. Celanese has also repurchased shares worth $500 million this year.

Celanese Corporation Price and Consensus

 

Celanese Corporation Price and Consensus | Celanese Corporation Quote

Zacks Rank & Other Stocks to Consider

Celanese currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are ArcelorMittal (MT - Free Report) , Westlake Chemical Corporation (WLK - Free Report) and Kronos Worldwide Inc. (KRO - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

ArcelorMittal has an expected long-term earnings growth rate of 11.3%. Its shares have moved up 27.8% year to date.

Westlake Chemical has an expected long-term earnings growth rate of 10.4%. Its shares have rallied 67% year to date.

Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have surged a whopping 131% year to date.

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