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Celanese (CE) Hits New 52-Week High: What's Driving It?

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Shares of Texas-based chemicals company Celanese Corporation (CE - Free Report) , scaled a fresh 52-week high of $102.71 on Sep 19, before pulling back to eventually close the day at $102.46.

Celanese has a market cap of roughly $14.1 billion. Average volume of shares traded in the last three months is around 882.5k.  

Celanese has outperformed the industry over a year. The company’s shares have moved up around 63.3% compared with roughly 27.1% gain recorded by the industry.


Driving Factors

Forecast-topping earnings performance in the second quarter and an upbeat outlook for the full year have contributed to the rally in Celanese’s shares. The company delivered positive earnings surprise of 2.9% in the second quarter of 2017.

Celanese also raised its earnings outlook for 2017 on the back of strong second-quarter results. The company now expects its adjusted earnings to rise 9-11% in 2017, compared with its prior view of 8-11%.

Advanced Engineered Materials is also expected to continue to grow offsetting the decline in tow earnings. The Acetyl Chain is anticipated to benefit from a volatile raw materials backdrop and the current industry environment is expected to improve profits as the year progresses.

The company’s strategic initiatives, including operational cost savings through productivity actions and efficiency enhancement, are expected to provide an impetus to earnings. Celanese has identified productivity opportunities of $100 million for 2017 through the execution of numerous projects.

Celanese is also well positioned to gain from acquisitions. The purchase of Italy-based SO.F.TER. Group strengthened Celanese’s solutions capability and project pipeline. SO.F.TER. Group’s modern manufacturing facilities and product portfolio are also expected to offer opportunities for additional growth, investment and synergies. Moreover, the acquisition of Nilit's nylon compounding unit is in sync with Celanese’s plans to become a leading, global nylon compound supplier.

Celanese’s shares also got a boost after it inked a deal in June with Blackstone Group L.P. (BX - Free Report) , a leading investment firm to form a joint venture (JV) that will create a global acetate tow supplier, where the former will own 70% of the JV and Blackstone the remaining 30%.

The JV will expand global production by adding eight fully-owned manufacturing plants and three existing JV sites. The new company, which is expected to generate 2017 annual pro-forma revenues of around $1.3 billion, will be well poised to address customers’ needs more efficiently and offer the best of quality and services. The integration of technology and complementary tow assets will also result in synergies, primarily from optimization of supply chain networks and procurement of raw materials, energy, equipment and other services.

Celanese Corporation Price and Consensus

 

Zacks Rank & Key Picks

Celanese currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the chemical space are Kronos Worldwide (KRO - Free Report) and Koppers Holdings Inc. (KOP - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos Worldwide has an expected long-term earnings growth of 5%.

Koppers Holdings has an expected long-term earnings growth of 18%.

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