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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 weak demand and customer destocking in certain end markets and pricing pressures.
Shares of this leading chemical and specialty materials maker are up 63.9% in a year compared with 32.3% 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 strategic acquisitions, productivity measures and investments in organic projects. 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 $120 million to the operating EBITDA of the Engineered Materials segment in fourth-quarter 2023. Celanese expects incremental M&M synergies of at least $150 million during 2024.
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 enabled 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 2024.
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.
Weak Demand & Pricing Ail
Celanese faces headwinds from demand softness and customer destocking in some of its end markets. It witnessed weak demand in several end markets and destocking in 2023. Soft demand led to inventory reduction and deferral of orders by the company’s customers. Demand remains weak in industrial and consumer goods end markets. The challenging conditions are likely to continue over the near term. Weaker demand recovery globally and destocking are likely to weigh on the company’s volumes in the first quarter of 2024.
The company is also being challenged by significant competition. Competitive pressures are hurting its prices. Significant competitive pricing pressures resulted in a 10% year-over-year decline in its pricing in 2023. The company expects the competitive environment to remain challenging in the first quarter of 2024.
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Denison Mines Corp. (DNN - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 70% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines carries a Zacks Rank #1. DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 95% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 85% in the past 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 weak demand and customer destocking in certain end markets and pricing pressures.
Shares of this leading chemical and specialty materials maker are up 63.9% in a year compared with 32.3% 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 strategic acquisitions, productivity measures and investments in organic projects. 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 $120 million to the operating EBITDA of the Engineered Materials segment in fourth-quarter 2023. Celanese expects incremental M&M synergies of at least $150 million during 2024.
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 enabled 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 2024.
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.
Weak Demand & Pricing Ail
Celanese faces headwinds from demand softness and customer destocking in some of its end markets. It witnessed weak demand in several end markets and destocking in 2023. Soft demand led to inventory reduction and deferral of orders by the company’s customers. Demand remains weak in industrial and consumer goods end markets. The challenging conditions are likely to continue over the near term. Weaker demand recovery globally and destocking are likely to weigh on the company’s volumes in the first quarter of 2024.
The company is also being challenged by significant competition. Competitive pressures are hurting its prices. Significant competitive pricing pressures resulted in a 10% year-over-year decline in its pricing in 2023. The company expects the competitive environment to remain challenging in the first quarter of 2024.
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 Carpenter Technology Corporation (CRS - Free Report) , Denison Mines Corp. (DNN - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 70% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Denison Mines carries a Zacks Rank #1. DNN beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 95% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 85% in the past year.