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Celanese (CE) Beats Earnings and Revenue Estimates in Q4
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Celanese Corporation (CE - Free Report) , a chemical and advanced materials producer, kept its earnings streak alive with a beat in fourth-quarter 2016.
The company logged adjusted earnings per share of $1.52 in the reported quarter, up 21.6% from $1.25 reported a year ago. The figure was above the Zacks Consensus Estimate of $1.51.
Celanese reported sales of $1,311 million for the quarter, down roughly 1.7% year over year. Sales, however, beat the Zacks Consensus Estimate of $1,295 million.
Celanese Corporation Price, Consensus and EPS Surprise
Material Solutions: The unit witnessed strong growth in the quarter as volume and productivity more than offset the decline in pricing. Within this segment, the Advanced Engineered Materials unit delivered its second highest fourth-quarter operating profit of $87 million and record adjusted EBIT of $121 million.
With the launch of 389 projects in the fourth quarter, the number of projects in 2016 exceeded targets and commercialized about 1,385 value-enhancing projects. Recent acquisitions also provide a momentum of opportunity to translate and extend the success of this model.
The Consumer Specialties unit maintained profitability on a year over year basis in the reported quarter as productivity actions and reduced raw material costs offset lower tow pricing.
Acetyl Chain: Celanese was able to improve margin and profitability in this business in the quarter despite a soft demand environment. Productivity gains and lower raw material costs more than offset pricing headwinds and lower volume.
Financials
Cash and cash equivalents were $638 million as of Dec 31, 2016, down 34% year over year. Long-term debt was up 17% to $2,890 million as of Dec 31, 2016. Capital expenditure in the quarter was $60 million.
Celanese generated operating cash flow of $893 million and free cash flow of $923 million in 2016. During the year, the company returned $701 million to its shareholders, including $500 million to buy back 7 million shares and $201 million of dividends.
Outlook
Celanese sees adjusted earnings per share to increase 8–11% in 2017. The company’s productivity actions and agility in its business models are expected to offset tow pricing and currency headwinds. The ongoing enhancement in the raw materials complex enables the company boost its acetyl value chain to increase margins worldwide. Advanced Engineered Materials is also expected to continue to generate value by commercializing new projects and extending the pipeline model through recent acquisitions.
Price Performance
Celanese has outperformed the Zacks categorized Chemicals-Diversified industry in the last three months. The company’s shares have gained around 19.8% over this period, compared with roughly 12.5% gain recorded by the industry.
BASF currently sports a Zacks Rank #1 and has an expected earnings growth of roughly 15.6% for the current year.
FMC has an expected earnings growth of around 16% for the current year. The stock carries a Zacks Rank #2.
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Celanese (CE) Beats Earnings and Revenue Estimates in Q4
Celanese Corporation (CE - Free Report) , a chemical and advanced materials producer, kept its earnings streak alive with a beat in fourth-quarter 2016.
The company logged adjusted earnings per share of $1.52 in the reported quarter, up 21.6% from $1.25 reported a year ago. The figure was above the Zacks Consensus Estimate of $1.51.
Celanese reported sales of $1,311 million for the quarter, down roughly 1.7% year over year. Sales, however, beat the Zacks Consensus Estimate of $1,295 million.
Celanese Corporation Price, Consensus and EPS Surprise
Celanese Corporation Price, Consensus and EPS Surprise | Celanese Corporation Quote
Segment Review
Material Solutions: The unit witnessed strong growth in the quarter as volume and productivity more than offset the decline in pricing. Within this segment, the Advanced Engineered Materials unit delivered its second highest fourth-quarter operating profit of $87 million and record adjusted EBIT of $121 million.
With the launch of 389 projects in the fourth quarter, the number of projects in 2016 exceeded targets and commercialized about 1,385 value-enhancing projects. Recent acquisitions also provide a momentum of opportunity to translate and extend the success of this model.
The Consumer Specialties unit maintained profitability on a year over year basis in the reported quarter as productivity actions and reduced raw material costs offset lower tow pricing.
Acetyl Chain: Celanese was able to improve margin and profitability in this business in the quarter despite a soft demand environment. Productivity gains and lower raw material costs more than offset pricing headwinds and lower volume.
Financials
Cash and cash equivalents were $638 million as of Dec 31, 2016, down 34% year over year. Long-term debt was up 17% to $2,890 million as of Dec 31, 2016. Capital expenditure in the quarter was $60 million.
Celanese generated operating cash flow of $893 million and free cash flow of $923 million in 2016. During the year, the company returned $701 million to its shareholders, including $500 million to buy back 7 million shares and $201 million of dividends.
Outlook
Celanese sees adjusted earnings per share to increase 8–11% in 2017. The company’s productivity actions and agility in its business models are expected to offset tow pricing and currency headwinds. The ongoing enhancement in the raw materials complex enables the company boost its acetyl value chain to increase margins worldwide. Advanced Engineered Materials is also expected to continue to generate value by commercializing new projects and extending the pipeline model through recent acquisitions.
Price Performance
Celanese has outperformed the Zacks categorized Chemicals-Diversified industry in the last three months. The company’s shares have gained around 19.8% over this period, compared with roughly 12.5% gain recorded by the industry.
Zacks Rank & Stocks to Consider
Celanese currently carries a Zacks Rank #2 (Buy).
Other well-placed companies in the chemical space include Kronos Worldwide Inc (KRO - Free Report) and BASF SE (BASFY - Free Report) and FMC Corporation (FMC - Free Report) .
Kronos Worldwide has an expected earnings growth of around 73% for the current year. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF currently sports a Zacks Rank #1 and has an expected earnings growth of roughly 15.6% for the current year.
FMC has an expected earnings growth of around 16% for the current year. The stock carries a Zacks Rank #2.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>