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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 28.6% over a year compared with the 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 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.
The acquisition of the majority of DuPont’s Mobility & Materials (“M&M”) business also enables Celanese to enhance its growth in high-value applications. CE, in its fourth-quarter call, said that it expects an upward trend in its quarterly earnings through 2023, backed by improvement in demand and the realization of synergies from the M&M 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 in 2023.
The company also continues to generate strong cash flows and is focused on boosting shareholders’ value. It generated operating cash flow of $1.8 billion and free cash flow of $1.3 billion in 2022. Celanese also returned $297 million to shareholders through dividend payouts during 2022.
A Few Headwinds
Celanese faces headwinds from raw material cost inflation due to supply constraints as witnessed during 2022. It is witnessing 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 first quarter of 2023.
The semiconductor shortage is still affecting automotive OEM production around the world. The chip crisis has been exacerbated by the Russia-Ukraine conflict. The company also witnessed significant destocking in automotive in the fourth quarter of 2022 in the Western Hemisphere. It expects destocking in automotive in this region to continue in first-quarter 2023. The destocking in the Americas in paints and coatings and construction applications may also impact the company’s Acetyl Chain segment in the first 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 Yamana Gold Inc. .
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 37.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has gained around 32% in a year.
Olympic Steel currently sports a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 60.6% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2%, on average. ZEUS has rallied around 39% in a year.
Yamana Gold currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AUY’s current-year earnings has been revised 3.8% upward in the past 60 days.
Yamana Gold beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 22.5% on average. AUY’s shares have gained roughly 6% in the past 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 28.6% over a year compared with the 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 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.
The acquisition of the majority of DuPont’s Mobility & Materials (“M&M”) business also enables Celanese to enhance its growth in high-value applications. CE, in its fourth-quarter call, said that it expects an upward trend in its quarterly earnings through 2023, backed by improvement in demand and the realization of synergies from the M&M 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 in 2023.
The company also continues to generate strong cash flows and is focused on boosting shareholders’ value. It generated operating cash flow of $1.8 billion and free cash flow of $1.3 billion in 2022. Celanese also returned $297 million to shareholders through dividend payouts during 2022.
A Few Headwinds
Celanese faces headwinds from raw material cost inflation due to supply constraints as witnessed during 2022. It is witnessing 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 first quarter of 2023.
The semiconductor shortage is still affecting automotive OEM production around the world. The chip crisis has been exacerbated by the Russia-Ukraine conflict. The company also witnessed significant destocking in automotive in the fourth quarter of 2022 in the Western Hemisphere. It expects destocking in automotive in this region to continue in first-quarter 2023. The destocking in the Americas in paints and coatings and construction applications may also impact the company’s Acetyl Chain segment in the first 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 Yamana Gold Inc. .
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 37.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has gained around 32% in a year.
Olympic Steel currently sports a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 60.6% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2%, on average. ZEUS has rallied around 39% in a year.
Yamana Gold currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AUY’s current-year earnings has been revised 3.8% upward in the past 60 days.
Yamana Gold beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 22.5% on average. AUY’s shares have gained roughly 6% in the past year.