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Celanese (CE) to Report Q4 Earnings: What's in the Offing?

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Celanese Corporation (CE - Free Report) is set to release fourth-quarter 2020 results after market close on Jan 28. The benefits of the company’s productivity actions, investments in high-return organic projects and strategic acquisitions are likely to get reflected in its fourth-quarter performance. However, it is likely to have faced headwinds stemming from pricing pressure and maintenance outages.

The leading chemical and specialty materials maker beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing the same once. It has a trailing four-quarter earnings surprise of roughly 8.61%, on average. The company posted an earnings surprise of around 15.4% in the last reported quarter.

Celanese’s shares have gained 12.6% in the past year compared with the industry’s 14.4% rise.

Let’s see how things are shaping up for this announcement.

Zacks Model

Our proven model predicts an earnings beat for Celanese this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.

Earnings ESP: Earnings ESP for Celanese is +2.38%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $1.68. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Celanese currently carries a Zacks Rank #2.

What do the Estimates Say?

The Zacks Consensus Estimate for revenues for Celanese for the to-be-reported quarter is pegged at $1,372 million, which suggests year-over-year decline of 4.2%.

The consensus mark for net sales in the Engineered Materials unit is currently pegged at $501 million for the fourth quarter, which calls for a 7% year-over-year decline.

Moreover, the Zacks Consensus Estimate for the Acetyl Chain segment’s net sales is currently pegged at $752 million that suggests a 2.46% decline from the year-ago quarter’s level. The same for the Acetate Tow division is pegged at $134 million, which suggests 9.5% year-over-year drop.

Factors at Play in Q4

Celanese is likely to have gained from its productivity actions, investments in organic projects and acquisitions in the quarter to be reported. It is committed toward executing its productivity programs that include the implementation of a number of cost reduction capital projects.

The company’s strategic actions that include cost savings through productivity initiatives, price increase actions and operational improvement are likely to have contributed to its bottom line in the to-be-reported quarter. Benefits of acquisitions and project commercialization are also expected to get reflected in fourth-quarter performance.

The company is also seeing recovery in demand across its end markets. The momentum witnessed in the third quarter is likely to have continued in the fourth quarter as well. The company is focused on controllable actions to drive strong growth amid uncertainties.

However, the company’s Engineered Materials segment is expected to have faced headwinds from a major turnaround at its Frankfurt copolymer facility and normal seasonality in the fourth quarter. As such, turnaround expenses are likely to have hurt margins of this segment during the quarter under review.

Celanese is also witnessing pricing pressure in the Acetyl Chain segment. Higher industry supply is hurting prices of acetic acid and vinyl acetate monomer. Prices of acetic acid is significantly below the year-ago quarter’s level as a recovery in demand is offset by increased supply. Pricing is likely to have remained under pressure in the fourth quarter and continued to impact Acetyl Chain margins.

Celanese Corporation Price and EPS Surprise


Celanese Corporation Price and EPS Surprise

Celanese Corporation price-eps-surprise | Celanese Corporation Quote


Other Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

LyondellBasell Industries N.V. (LYB - Free Report) , scheduled to release earnings on Jan 29, has an Earnings ESP of +10.12% and carries a Zacks Rank #2.You can see the complete list of today’s Zacks #1 Rank stocks here.

Eastman Chemical Company (EMN - Free Report) , scheduled to release earnings on Jan 28, has an Earnings ESP of +16.17% and carries a Zacks Rank #2.

Ecolab Inc. (ECL - Free Report) , scheduled to release earnings on Feb 16, has an Earnings ESP of +0.08% and a Zacks Rank #3.

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