Back to top

Here's Why You Should Add Celanese (CE) to Your Portfolio

Read MoreHide Full Article

Celanese Corporation (CE - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s delve deeper into the factors that make this chemical maker an intriguing choice for investors right now.

What’s Working in Favor of CE?

An Outperformer: Celanese has outperformed the industry it belongs to over a year. The company’s shares have gained around 13.8% over this period, compared with roughly 10.9% gain recorded by the industry.



 

Positive Earnings Surprise History: Celanese has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 3.9%.

Attractive Valuation: Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Celanese is currently trading at trailing 12-month EV/EBITDA multiple of 12, cheaper compared with the industry average of 15.5.

Superior Return on Equity (ROE): Celanese’s ROE of 33%, as compared with the industry average of 9.5%, manifests the company’s efficiency in utilizing shareholder’s funds.

Upbeat Outlook: Celanese, in February, raised its earnings guidance for 2018, citing a stronger start to the year across its Acetyl Chain and Advanced Engineered Materials businesses. The company now envisions its adjusted earnings per share to grow in the 12-16% range year over year in 2018, up from its earlier view of 10-14% growth.

Celanese is witnessing better-than-expected performance in each of its businesses. The company noted that its Acetyl Chain unit continues to build momentum globally while improved pricing and strong demand trends in its Advanced Engineered Materials business are contributing to its earnings strength.

The company’s strategic measures including operational cost savings through productivity actions and pricing initiatives are likely to lend support to its earnings in 2018.

Celanese, in February, wrapped up its acquisition of Omni Plastics L.L.C. and its subsidiaries, including the distributor Resinal de Mexico. Omni Plastics specializes in custom compounding of various engineered thermoplastic materials, which is a material of choice in various markets including electrical and electronics, automotive, industrial and consumer goods.

The buyout reinforces Celanese’s global asset base by adding compounding capacity in the Americas, which will allow the company to continue supporting a diverse and growing customer base.

Celanese Corporation Price and Consensus

 

Celanese Corporation Price and Consensus | Celanese Corporation Quote

Other Stocks to Consider

Other top-ranked companies in the basic materials space include Kronos Worldwide, Inc. (KRO - Free Report) , Methanex Corporation (MEOH - Free Report) and Eastman Chemical Company (EMN - Free Report) .

Kronos sports a Zacks Rank #1 and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 46% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 15%. Its shares have gained around 42% over a year.

Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 34% over a year.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like