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Here's Why You Should Hold Onto Celanese (CE) Stock for Now
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Celanese Corporation (CE - Free Report) is gaining from its productivity measures, investments in organic projects and strategic acquisitions amid certain headwinds including raw material cost inflation.
Shares of this leading chemical and specialty materials maker are down 6.5% over a year compared with the 11.9% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Going in CE’s Favor?
Celanese is benefiting from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions. The company is also gaining from higher demand in most of its end markets. Celanese, in its fourth-quarter call, stated that the early 2022 order book reflects strong demand for its products across most end markets.
The company also continues to actively pursue acquisitions, which are providing it opportunities for additional growth, investment and synergies. The acquisitions of SO.F.TER., Nilit and Omni Plastics are expected to contribute to earnings expansion in the company's Engineered Materials segment. The Elotex acquisition also strengthened the company’s position in the vinyl acetate ethylene emulsions space. The buyout is expected to contribute to volumes in the Acetyl Chain segment.
The purchase of Exxon Mobil's Santoprene business also broadens the company’s portfolio of engineered solutions and enables it to offer a wider range of functionalized solutions to targeted growth areas, including future mobility, medical and sustainability. Celanese expects the acquisition to be immediately accretive to its 2022 adjusted earnings per share and free cash flow.
Celanese, in Feb 2022, also entered into an agreement with DuPont to acquire the majority of the latter’s Mobility & Materials segment for cash proceeds of $11 billion. Through this deal, Celanese will be able to enhance its growth in high-value applications. It expects to achieve run-rate synergies of around $450 million within the first four years following the completion of the deal. The buyout is expected to be immediately accretive to the company’s adjusted earnings per share.
Celanese also remains focused on executing its productivity programs that include the implementation of a number of cost reduction capital projects. Productivity actions are expected to support to its margins.
The company also continues to generate strong cash flows and is focused on boosting shareholders’ value. Celanese, in January 2021, raised its quarterly cash dividend by 10% to 68 cents a share. The company also returned $1.3 billion to shareholders through dividend payouts and share repurchases during 2021.
A Few Concerns
The company faces headwinds from elevated raw material costs due to supply constraints as witnessed in the last reported quarter. It faced sustained inflation across many key raw materials as well as supply chain costs in the fourth quarter of 2021. Tight availability of resins including nylon as well as glass fiber and flame retardants is contributing to raw material cost inflation. As such, higher input costs are expected to affect margins in the first quarter of 2022. Celanese also expects continued moderation in the Acetyl Chain pricing conditions.
The semiconductor shortage is also hurting automotive OEM production around the world. Weaker automotive production is likely to affect the company’s automotive order patterns over the near term.
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 108.7% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 37.4% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 60.3%, on average. NTR has rallied around 95% in a year.
AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 64.9% for the current year. ASIX's consensus estimate for current-year earnings has been revised 53.1% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 69% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 114.7% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 35.1% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.7%, on average. CMC has gained around 43% in a year.
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Here's Why You Should Hold Onto Celanese (CE) Stock for Now
Celanese Corporation (CE - Free Report) is gaining from its productivity measures, investments in organic projects and strategic acquisitions amid certain headwinds including raw material cost inflation.
Shares of this leading chemical and specialty materials maker are down 6.5% over a year compared with the 11.9% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Going in CE’s Favor?
Celanese is benefiting from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions. The company is also gaining from higher demand in most of its end markets. Celanese, in its fourth-quarter call, stated that the early 2022 order book reflects strong demand for its products across most end markets.
The company also continues to actively pursue acquisitions, which are providing it opportunities for additional growth, investment and synergies. The acquisitions of SO.F.TER., Nilit and Omni Plastics are expected to contribute to earnings expansion in the company's Engineered Materials segment. The Elotex acquisition also strengthened the company’s position in the vinyl acetate ethylene emulsions space. The buyout is expected to contribute to volumes in the Acetyl Chain segment.
The purchase of Exxon Mobil's Santoprene business also broadens the company’s portfolio of engineered solutions and enables it to offer a wider range of functionalized solutions to targeted growth areas, including future mobility, medical and sustainability. Celanese expects the acquisition to be immediately accretive to its 2022 adjusted earnings per share and free cash flow.
Celanese, in Feb 2022, also entered into an agreement with DuPont to acquire the majority of the latter’s Mobility & Materials segment for cash proceeds of $11 billion. Through this deal, Celanese will be able to enhance its growth in high-value applications. It expects to achieve run-rate synergies of around $450 million within the first four years following the completion of the deal. The buyout is expected to be immediately accretive to the company’s adjusted earnings per share.
Celanese also remains focused on executing its productivity programs that include the implementation of a number of cost reduction capital projects. Productivity actions are expected to support to its margins.
The company also continues to generate strong cash flows and is focused on boosting shareholders’ value. Celanese, in January 2021, raised its quarterly cash dividend by 10% to 68 cents a share. The company also returned $1.3 billion to shareholders through dividend payouts and share repurchases during 2021.
A Few Concerns
The company faces headwinds from elevated raw material costs due to supply constraints as witnessed in the last reported quarter. It faced sustained inflation across many key raw materials as well as supply chain costs in the fourth quarter of 2021. Tight availability of resins including nylon as well as glass fiber and flame retardants is contributing to raw material cost inflation. As such, higher input costs are expected to affect margins in the first quarter of 2022. Celanese also expects continued moderation in the Acetyl Chain pricing conditions.
The semiconductor shortage is also hurting automotive OEM production around the world. Weaker automotive production is likely to affect the company’s automotive order patterns over the near term.
Celanese Corporation Price and Consensus
Celanese Corporation price-consensus-chart | Celanese Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 108.7% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 37.4% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 60.3%, on average. NTR has rallied around 95% in a year.
AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 64.9% for the current year. ASIX's consensus estimate for current-year earnings has been revised 53.1% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 69% in a year.
Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 114.7% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 35.1% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.7%, on average. CMC has gained around 43% in a year.