We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Celanese (CE) Up 5.5% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Celanese (CE - Free Report) . Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Celanese due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Celanese's Earnings Beat, Revenues Miss Estimates in Q3
Celanese recorded earnings from continuing operations of $3.00 per share for the third quarter of 2018, showing an around 79% rise from $1.68 a year ago.
Barring one-time items, earnings were $2.96 a share, reflecting a roughly 53% surge from $1.93 posted a year ago. It surpassed the Zacks Consensus Estimate of $2.75.
Revenues of $1,771 million rose roughly 13% year over year but lagged the Zacks Consensus Estimate of $1,817 million.
The company benefited from gains in its EM and Acetyl Chain units in the quarter. Higher pricing across these businesses also supported the results.
Segment Review
Sales at the EM unit jumped 12% year over year to $642 million in the quarter. Segment income went up around 19% year over year to $187 million. Increased pricing and volume growth in Asia and the Americas, better product mix, recent acquisitions and project commercializations contributed to the division’s earnings. The company commercialized 925 projects in EM during the quarter, up 58% year over year. The company initiated 2,000 projects in the quarter and is on track to deliver more than 3,000 project wins in 2018.
Celanese saw lower pricing in the quarter at its Acetate Tow segment due to reduced industry capacity utilization, partly masked by mix and productivity gains. Segment income was $65 million, down 5.8% year over year.
The Acetyl Chain segment saw net sales of $1 billion in the quarter, up around 17% year over year. Segment income was $277 million, up around 76.4% year over year. The division gained from an improved supply and demand fundamentals, performance of the Acetyl Chain operating model as well as higher pricing and manufacturing activations in the quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $703 million, up around 52.4% year over year. Long-term debt was up 8.2% year over year to $3,196 million.
Celanese generated operating cash flow of $467 million and free cash flow of $382 million in the quarter. Capital expenditure in the quarter totaled $79 million. Moreover, the company returned $223 million to shareholders through dividends and share repurchases.
Outlook
Celanese raised its adjusted earnings per share guidance for 2018 to roughly $10.90-$11.10 factoring in strength in its EM and Acetyl Chain units. The company expects the momentum in Acetyl Chain and EM to continue in the rest of 2018. EM segment is expected to keep the pace of earnings growth with traction from new projects and bolt-on acquisitions. Moreover, the company expects to deliver free cash flow of nearly $1.2 billion in 2018. The company is also executing its three-year strategic plan.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.45% due to these changes.
VGM Scores
At this time, Celanese has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Celanese has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Celanese (CE) Up 5.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Celanese (CE - Free Report) . Shares have added about 5.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Celanese due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Celanese's Earnings Beat, Revenues Miss Estimates in Q3
Celanese recorded earnings from continuing operations of $3.00 per share for the third quarter of 2018, showing an around 79% rise from $1.68 a year ago.
Barring one-time items, earnings were $2.96 a share, reflecting a roughly 53% surge from $1.93 posted a year ago. It surpassed the Zacks Consensus Estimate of $2.75.
Revenues of $1,771 million rose roughly 13% year over year but lagged the Zacks Consensus Estimate of $1,817 million.
The company benefited from gains in its EM and Acetyl Chain units in the quarter. Higher pricing across these businesses also supported the results.
Segment Review
Sales at the EM unit jumped 12% year over year to $642 million in the quarter. Segment income went up around 19% year over year to $187 million. Increased pricing and volume growth in Asia and the Americas, better product mix, recent acquisitions and project commercializations contributed to the division’s earnings. The company commercialized 925 projects in EM during the quarter, up 58% year over year. The company initiated 2,000 projects in the quarter and is on track to deliver more than 3,000 project wins in 2018.
Celanese saw lower pricing in the quarter at its Acetate Tow segment due to reduced industry capacity utilization, partly masked by mix and productivity gains. Segment income was $65 million, down 5.8% year over year.
The Acetyl Chain segment saw net sales of $1 billion in the quarter, up around 17% year over year. Segment income was $277 million, up around 76.4% year over year. The division gained from an improved supply and demand fundamentals, performance of the Acetyl Chain operating model as well as higher pricing and manufacturing activations in the quarter.
Financials
Celanese ended the quarter with cash and cash equivalents of $703 million, up around 52.4% year over year. Long-term debt was up 8.2% year over year to $3,196 million.
Celanese generated operating cash flow of $467 million and free cash flow of $382 million in the quarter. Capital expenditure in the quarter totaled $79 million. Moreover, the company returned $223 million to shareholders through dividends and share repurchases.
Outlook
Celanese raised its adjusted earnings per share guidance for 2018 to roughly $10.90-$11.10 factoring in strength in its EM and Acetyl Chain units. The company expects the momentum in Acetyl Chain and EM to continue in the rest of 2018. EM segment is expected to keep the pace of earnings growth with traction from new projects and bolt-on acquisitions. Moreover, the company expects to deliver free cash flow of nearly $1.2 billion in 2018. The company is also executing its three-year strategic plan.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.45% due to these changes.
VGM Scores
At this time, Celanese has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Celanese has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.