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Celanese (CE) Hits a 52-Week High: What's Driving the Stock?

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Shares of Celanese Corporation (CE - Free Report) scaled a fresh 52-week high of $112.44 on Jan 12, eventually closing the day at $111.34.

The company has a market cap of roughly $15.1 billion. Average volume of shares traded in the last three months is around 599.7K. Celanese also has an expected long-term EPS growth of 9%.

Celanese has an impressive earnings surprise history. The company has topped the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 2.5%.

Shares of Celanese gained 34.9% in a year’s time, outperforming the industry’s 30% growth.

 

Let’s take a look into the factors that are driving this chemical maker’s stock.

Driving Factors

An upbeat outlook for full-year 2017 coupled with strategic acquisitions and internal growth initiatives have contributed to a rally in Celanese’s shares. In October 2017, Celanese said that it is optimistic about achieving adjusted earnings per share growth at the high end of the previously announced guidance of 9-11% for 2017. The company also sees continued improvement in its acetyl’s chain and materials businesses.

Celanese’s strategic initiatives, including operational cost savings through productivity actions and efficiency enhancement, drive its earnings.

Furthermore, the company is well placed to gain from acquisitions and its acetate tow joint venture (JV) with Blackstone. Notably, 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 will offer opportunities for additional growth, investment and synergies. The acquisition of Nilit's nylon compounding unit is also in sync with Celanese’s plans to become a leading nylon compound supplier, globally.

Moreover, in June 2017, Celanese and funds managed by Blackstone entered into an agreement to form a JV. This, in turn, is likely to create a global acetate tow supplier where the former will own 70% of the JV and Blackstone the remaining 30%.

The JV will have an expanded global production footprint, including eight fully-owned manufacturing plants and three existing JV sites. The new company will be well placed to address customers’ needs more efficiently and offer the best of quality and services.

Celanese remains committed to expand capacity as well. The company, in October, declared its plans to expand the capacity of certain product-specific manufacturing production sites and global compounding assets to augment growth in its engineered materials business. It will also be adding production lines in China, the United States and Italy that are expected to raise compounding capacity by around 100 kilo tons per year.

Meanwhile, Celanese continues to generate strong cash flows and is focused on returning value to shareholders. The company generated operating cash flow of $255 million and free cash flow of $181 million in third-quarter 2017. It also returned $262 million to shareholders, including $62 million in dividends in the same period.

Celanese Corporation Price and Consensus

Zacks Rank & Stocks to Consider

Celanese carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kronos Worldwide Inc. (KRO - Free Report) , Koppers Holding Inc. (KOP - Free Report) and Huntsman Corporation (HUN - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos Worldwide has an expected long-term earnings growth of 5%. Its shares skyrocketed 115.4% over a year.

Koppers has an expected long-term earnings growth of 18%. Shares of the company rallied 19.8% over a year.

Huntsman has an expected long-term earnings growth of 8%. Its shares soared 71.4% over a year.

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