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

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Shares of Celanese Corporation (CE - Free Report) scaled a fresh 52-week high of $114.58 on May 17, before eventually closing the day at $113.90.

The company has a market cap of roughly $15.5 billion. Average volume of shares traded in the last three months was around 886.7K. Celanese has an expected long-term earnings per share growth rate of 8.9%.

Celanese’s shares have gained 11.2% in the past three months, significantly outperforming the industry’s 1.6% decline.



Driving Factors

Forecast-topping first-quarter results, upbeat outlook and compelling prospects have contributed to the rally in Celanese’s shares.

The company saw its profits surge more than two-fold year over year in first-quarter 2018. Adjusted earnings of $2.79 per share topped the Zacks Consensus Estimate of $2.36.

Revenues climbed roughly 26% year over year to $1,851 million, surpassing the Zacks Consensus Estimate of $1,696 million.

Notably, the company benefited from gains across its Engineered Materials (EM) and Acetyl Chain units in the quarter. Improving industry fundamentals and the strength of the company’s commercial models also supported the results.

Celanese also raised its earnings guidance for 2018 based on strength across its Acetyl Chain and EM units. The company now envisions its adjusted earnings per share to grow in the 20-25% range year over year in 2018, up from its previous guidance of 12-16% growth.

The company’s board also approved a 17% hike in its quarterly cash dividend to 54 cents per share from the prior payout of 46 cents. This translates into a dividend of $2.16 per share on an annualized basis, up from $1.84. The move reflects the company’s strong cash generation and its confidence in growth prospects of its businesses.

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.

It also remains focused on growth through acquisitions. The company, in February, wrapped up the 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.

Zacks Rank & Other Stocks to Consider

Celanese currently sports a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks worth considering in the basic materials space include The Chemours Company (CC - Free Report) , Westlake Chemical Corporation (WLK - Free Report) and Huntsman Corporation (HUN - Free Report) , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained 23.1% in a year.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 96.4% in a year.

Huntsman has an expected long-term earnings growth rate of 8.3%. Its shares have moved up 25.1% in a year.

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