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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 benefiting from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions amid headwinds from demand softness.
Shares of this leading chemical and specialty materials maker are up 34.9% over a year compared with a 12.1% rise 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.
Acquisitions, Productivity to Aid Results
Celanese is gaining from its productivity measures, investments in organic projects and strategic acquisitions amid headwinds from demand softness and customer destocking in certain end markets.
The company is actively pursuing acquisitions, which are providing it opportunities for additional growth, investment and synergies. The acquisition of the majority of DuPont’s Mobility & Materials (“M&M”) business has allowed Celanese to enhance its growth in high-value applications. M&M contributed $125 million to the company’s operating EBITDA in third-quarter 2023, up 15% sequentially. Celanese sees a sequential increase in contribution in the fourth quarter.
The acquisitions of SO.F.TER., Nilit and Omni Plastics are also 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. Moreover, the purchase of Exxon Mobil's Santoprene business broadened 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 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 is proactively implementing strategic initiatives recognizing the volatility and unpredictability of the current market landscape and competitive environment. These actions involve strengthening its commercial teams, aligning production and inventory levels with prevailing demand, implementing cost-saving measures, and optimizing cash flow. These endeavors are expected to result in robust cash generation and a continuation of earnings growth. The company's incremental cost actions are expected to deliver $60-$80 million in savings in the second half of 2023.
Weak Demand Ails
Celanese faces headwinds from demand softness and customer destocking in certain end markets. It witnessed weak demand in several end markets and continued customer destocking in the third quarter of 2023. Soft demand has led to inventory reduction and deferral of orders by the company’s customers. Demand remains weak in industrial and electrical & electronics end markets. Weaker demand recovery globally and destocking are likely to continue to weigh on the company’s volumes and pricing in the fourth quarter.
Better-ranked stocks worth a look in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. DNN has a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 72% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current year has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 22% in the past year.
Andersons currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 5.1% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied roughly 47% 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 benefiting from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions amid headwinds from demand softness.
Shares of this leading chemical and specialty materials maker are up 34.9% over a year compared with a 12.1% rise 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.
Acquisitions, Productivity to Aid Results
Celanese is gaining from its productivity measures, investments in organic projects and strategic acquisitions amid headwinds from demand softness and customer destocking in certain end markets.
The company is actively pursuing acquisitions, which are providing it opportunities for additional growth, investment and synergies. The acquisition of the majority of DuPont’s Mobility & Materials (“M&M”) business has allowed Celanese to enhance its growth in high-value applications. M&M contributed $125 million to the company’s operating EBITDA in third-quarter 2023, up 15% sequentially. Celanese sees a sequential increase in contribution in the fourth quarter.
The acquisitions of SO.F.TER., Nilit and Omni Plastics are also 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. Moreover, the purchase of Exxon Mobil's Santoprene business broadened 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 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 is proactively implementing strategic initiatives recognizing the volatility and unpredictability of the current market landscape and competitive environment. These actions involve strengthening its commercial teams, aligning production and inventory levels with prevailing demand, implementing cost-saving measures, and optimizing cash flow. These endeavors are expected to result in robust cash generation and a continuation of earnings growth. The company's incremental cost actions are expected to deliver $60-$80 million in savings in the second half of 2023.
Weak Demand Ails
Celanese faces headwinds from demand softness and customer destocking in certain end markets. It witnessed weak demand in several end markets and continued customer destocking in the third quarter of 2023. Soft demand has led to inventory reduction and deferral of orders by the company’s customers. Demand remains weak in industrial and electrical & electronics end markets. Weaker demand recovery globally and destocking are likely to continue to weigh on the company’s volumes and pricing in the fourth quarter.
Celanese Corporation Price and Consensus
Celanese Corporation price-consensus-chart | Celanese Corporation Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Denison Mines Corp. (DNN - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Denison Mines has a projected earnings growth rate of 100% for the current year. DNN has a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 72% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current year has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 22% in the past year.
Andersons currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 5.1% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied roughly 47% in a year.