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Here's Why You Should Retain Celanese (CE) in Your Portfolio
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Celanese Corporation (CE - Free Report) is benefiting from its productivity measures, investments in organic projects and strategic acquisitions amid certain headwinds including higher raw material costs.
Shares of this leading chemical and specialty materials maker are down 32.2% over a year compared with the 24.7% 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 gaining from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions.
The company 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 accretive to its 2022 adjusted earnings per share and free cash flow.
The acquisition of the majority of DuPont’s Mobility & Materials business also enables Celanese to enhance its growth in high-value applications. It expects to achieve run-rate cost and revenue synergies of more than $500 million from the acquisition.
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.
A Few Headwinds
Celanese is exposed to headwinds from raw material cost inflation due to supply constraints. It is witnessing sustained inflation across many key raw materials as well as supply chain costs. Tight availability is expected to keep raw material costs elevated over the near term. Headwinds from higher input, energy and logistics costs are expected to continue in the fourth quarter of 2022.
The semiconductor shortage is also hurting automotive OEM production around the world. The chip crisis has been exacerbated by the Russia-Ukraine conflict. Global automotive build rates remain depressed, impacted by the pandemic-led lockdowns in China and the chip crisis. Weaker automotive production is likely to affect the company’s automotive order patterns over the near term. Demand softness in Asia and Europe and customer destocking are also expected to affect the company’s performance in the fourth quarter.
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Olympic Steel, Inc. (ZEUS - Free Report) and Commercial Metals Company (CMC - Free Report) .
Steel Dynamics has a projected earnings growth rate of 36.1% for the current year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 7.3% upward in the past 60 days.
Steel Dynamics has a trailing four-quarter earnings surprise of roughly 6.2%. STLD has rallied roughly 78% in a year. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Olympic Steel currently carries a Zacks Rank #1. The consensus estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 75% in a year.
Commercial Metals currently carries a Zacks Rank #1. The Zacks Consensus Estimate for CMC's current-year earnings has been revised 13.8% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 55% in a year.
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Here's Why You Should Retain Celanese (CE) in Your Portfolio
Celanese Corporation (CE - Free Report) is benefiting from its productivity measures, investments in organic projects and strategic acquisitions amid certain headwinds including higher raw material costs.
Shares of this leading chemical and specialty materials maker are down 32.2% over a year compared with the 24.7% 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 gaining from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions.
The company 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 accretive to its 2022 adjusted earnings per share and free cash flow.
The acquisition of the majority of DuPont’s Mobility & Materials business also enables Celanese to enhance its growth in high-value applications. It expects to achieve run-rate cost and revenue synergies of more than $500 million from the acquisition.
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.
A Few Headwinds
Celanese is exposed to headwinds from raw material cost inflation due to supply constraints. It is witnessing sustained inflation across many key raw materials as well as supply chain costs. Tight availability is expected to keep raw material costs elevated over the near term. Headwinds from higher input, energy and logistics costs are expected to continue in the fourth quarter of 2022.
The semiconductor shortage is also hurting automotive OEM production around the world. The chip crisis has been exacerbated by the Russia-Ukraine conflict. Global automotive build rates remain depressed, impacted by the pandemic-led lockdowns in China and the chip crisis. Weaker automotive production is likely to affect the company’s automotive order patterns over the near term. Demand softness in Asia and Europe and customer destocking are also expected to affect the company’s performance in the fourth quarter.
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 Steel Dynamics, Inc. (STLD - Free Report) , Olympic Steel, Inc. (ZEUS - Free Report) and Commercial Metals Company (CMC - Free Report) .
Steel Dynamics has a projected earnings growth rate of 36.1% for the current year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 7.3% upward in the past 60 days.
Steel Dynamics has a trailing four-quarter earnings surprise of roughly 6.2%. STLD has rallied roughly 78% in a year. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Olympic Steel currently carries a Zacks Rank #1. The consensus estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 75% in a year.
Commercial Metals currently carries a Zacks Rank #1. The Zacks Consensus Estimate for CMC's current-year earnings has been revised 13.8% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 55% in a year.