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Celanese (CE) Up 20.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Celanese (CE - Free Report) . Shares have added about 20.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Celanese due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Celanese’s Q3 Earnings Surpass Estimates, Sales Miss
Celanese reported earnings from continuing operations of $8.70 per share in third-quarter 2023, up from $1.76 in the prior-year quarter.
Adjusted earnings in the third quarter were $2.50 per share, down 36.5% from $3.94 reported a year ago. The bottom line beat the Zacks Consensus Estimate of $2.20.
Revenues of around $2.72 billion increased roughly 18.3% year over year. However, revenues missed the Zacks Consensus Estimate of $2.76 billion.
Celanese implemented measures to lower expenses, synchronize production and inventory with market demand and boost cash flow generation in light of challenging demand conditions and competitive factors in the reported quarter.
Segment Highlights
Net sales in the Engineered Materials unit were $1.53 million in the reported quarter, up around 64% year over year. It beat our estimate of $1.46 billion. The segment reported an operating profit of $691 million and an adjusted EBIT of $229 million in the third quarter.
The Acetyl Chain segment posted net sales of $1.22 billion, down nearly 12.7% year over year. It lagged our estimate of $1.28 billion. The segment generated an operating profit of $272 million and an adjusted EBIT of $310 million in the third quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $1.36 billion, up roughly 5% sequentially. Long-term debt was down around 4.6% sequentially to $12.3 billion.
Cash provided by operating activities was $403 million and free cash flow was $268 million in the reported quarter. Capital expenditures were $131 million in the quarter.
Outlook
Celanese expects adjusted earnings in the range of $2.10-$2.50 per share for the fourth quarter of 2023. The projection includes the expected roughly 30 cents impact from the M&M amortization. For the full year, Celanese anticipates adjusted earnings at the bottom end of the guidance range of $9-$10, which includes approximately $1.20 per share of M&M transaction amortization.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -13.04% due to these changes.
VGM Scores
Currently, Celanese has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Celanese has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Celanese belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Linde (LIN - Free Report) , has gained 3.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Linde reported revenues of $8.16 billion in the last reported quarter, representing a year-over-year change of -7.3%. EPS of $3.63 for the same period compares with $3.10 a year ago.
For the current quarter, Linde is expected to post earnings of $3.50 per share, indicating a change of +10.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Linde has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Celanese (CE) Up 20.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Celanese (CE - Free Report) . Shares have added about 20.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Celanese due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Celanese’s Q3 Earnings Surpass Estimates, Sales Miss
Celanese reported earnings from continuing operations of $8.70 per share in third-quarter 2023, up from $1.76 in the prior-year quarter.
Adjusted earnings in the third quarter were $2.50 per share, down 36.5% from $3.94 reported a year ago. The bottom line beat the Zacks Consensus Estimate of $2.20.
Revenues of around $2.72 billion increased roughly 18.3% year over year. However, revenues missed the Zacks Consensus Estimate of $2.76 billion.
Celanese implemented measures to lower expenses, synchronize production and inventory with market demand and boost cash flow generation in light of challenging demand conditions and competitive factors in the reported quarter.
Segment Highlights
Net sales in the Engineered Materials unit were $1.53 million in the reported quarter, up around 64% year over year. It beat our estimate of $1.46 billion. The segment reported an operating profit of $691 million and an adjusted EBIT of $229 million in the third quarter.
The Acetyl Chain segment posted net sales of $1.22 billion, down nearly 12.7% year over year. It lagged our estimate of $1.28 billion. The segment generated an operating profit of $272 million and an adjusted EBIT of $310 million in the third quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $1.36 billion, up roughly 5% sequentially. Long-term debt was down around 4.6% sequentially to $12.3 billion.
Cash provided by operating activities was $403 million and free cash flow was $268 million in the reported quarter. Capital expenditures were $131 million in the quarter.
Outlook
Celanese expects adjusted earnings in the range of $2.10-$2.50 per share for the fourth quarter of 2023. The projection includes the expected roughly 30 cents impact from the M&M amortization. For the full year, Celanese anticipates adjusted earnings at the bottom end of the guidance range of $9-$10, which includes approximately $1.20 per share of M&M transaction amortization.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -13.04% due to these changes.
VGM Scores
Currently, Celanese has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Celanese has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Celanese belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Linde (LIN - Free Report) , has gained 3.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Linde reported revenues of $8.16 billion in the last reported quarter, representing a year-over-year change of -7.3%. EPS of $3.63 for the same period compares with $3.10 a year ago.
For the current quarter, Linde is expected to post earnings of $3.50 per share, indicating a change of +10.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Linde has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.