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Here's Why You Should Hold Onto Celanese (CE) Stock for Now
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Celanese Corporation (CE - Free Report) is expected to benefit from its productivity measures, investments in organic projects and strategic acquisitions amid certain headwinds including pricing pressure and maintenance outages.
Shares of this leading chemical and specialty materials maker are up 4.7% year to date compared with the 6.4% rise of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Going in CE’s Favor?
Celanese is gaining from its productivity actions, investments in high-return organic projects and strategic acquisitions. It remains committed to execute its productivity programs that include the implementation of a number of cost reduction capital projects.
The company expects to achieve gross savings of $200 million from its productivity actions in 2020. Notably, the company has already attained $166 million of this productivity target. Productivity actions are expected to lend support to its margins in 2020.
Moreover, Celanese continues to actively pursue acquisitions, which are providing it opportunities for additional growth, investment and synergies. The acquisitions of SO.F.TER., Nilit and Omni Plastics are expected to contribute to earnings expansion in the company's Engineered Materials segment. The Elotex acquisition also strengthened the company’s position in the vinyl acetate ethylene emulsions space. The buyout is expected to contribute to volumes in the Acetyl Chain segment this year.
The company is also seeing a recovery in demand across most of its end markets. It expects the momentum it witnessed in the third quarter to continue in the fourth quarter.
A Few Concerns
The company’s Engineered Materials segment faces headwinds from a major turnaround at its Frankfurt POM facility in the fourth quarter. The company expects total costs associated with the turnaround to be a $30 million headwind on a sequential comparison basis in the fourth quarter. It sees an associated earnings headwind of 20 cents in the quarter. As such, turnaround expenses are expected to hurt margins of this segment in the fourth quarter.
Celanese is also witnessing pricing pressure in its Acetyl Chain segment. Higher industry supply is hurting prices of acetic acid and vinyl acetate monomer. Prices of acetic acid remains significantly below the year-ago level as a recovery in demand is offset by increased supply. Pricing is likely to remain under pressure in the fourth quarter and continue to impact Acetyl Chain margins. The segment also faces headwind from cost associated with turnaround at the Clear Lake acetic acid unit in the fourth quarter.
Better-ranked stocks worth considering in the basic materials space include Bunge Limited (BG - Free Report) , Impala Platinum Holdings Limited (IMPUY - Free Report) and BHP Group (BHP - Free Report) .
Bunge has an expected earnings growth rate of 43% for the current year. The company’s shares have gained around 14% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Impala Platinum has an expected earnings growth rate of 131.7% for the current fiscal. The company’s shares have rallied around 30% in the past year. It currently carries a Zacks Rank #1.
BHP Group has a projected earnings growth rate of 32.4% for the current fiscal year. The company’s shares have gained around 15% in a year. It currently carries a Zacks Rank #2 (Buy).
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Here's Why You Should Hold Onto Celanese (CE) Stock for Now
Celanese Corporation (CE - Free Report) is expected to benefit from its productivity measures, investments in organic projects and strategic acquisitions amid certain headwinds including pricing pressure and maintenance outages.
Shares of this leading chemical and specialty materials maker are up 4.7% year to date compared with the 6.4% rise of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
What’s Going in CE’s Favor?
Celanese is gaining from its productivity actions, investments in high-return organic projects and strategic acquisitions. It remains committed to execute its productivity programs that include the implementation of a number of cost reduction capital projects.
The company expects to achieve gross savings of $200 million from its productivity actions in 2020. Notably, the company has already attained $166 million of this productivity target. Productivity actions are expected to lend support to its margins in 2020.
Moreover, Celanese continues to actively pursue acquisitions, which are providing it opportunities for additional growth, investment and synergies. The acquisitions of SO.F.TER., Nilit and Omni Plastics are expected to contribute to earnings expansion in the company's Engineered Materials segment. The Elotex acquisition also strengthened the company’s position in the vinyl acetate ethylene emulsions space. The buyout is expected to contribute to volumes in the Acetyl Chain segment this year.
The company is also seeing a recovery in demand across most of its end markets. It expects the momentum it witnessed in the third quarter to continue in the fourth quarter.
A Few Concerns
The company’s Engineered Materials segment faces headwinds from a major turnaround at its Frankfurt POM facility in the fourth quarter. The company expects total costs associated with the turnaround to be a $30 million headwind on a sequential comparison basis in the fourth quarter. It sees an associated earnings headwind of 20 cents in the quarter. As such, turnaround expenses are expected to hurt margins of this segment in the fourth quarter.
Celanese is also witnessing pricing pressure in its Acetyl Chain segment. Higher industry supply is hurting prices of acetic acid and vinyl acetate monomer. Prices of acetic acid remains significantly below the year-ago level as a recovery in demand is offset by increased supply. Pricing is likely to remain under pressure in the fourth quarter and continue to impact Acetyl Chain margins. The segment also faces headwind from cost associated with turnaround at the Clear Lake acetic acid unit in the fourth quarter.
Celanese Corporation Price and Consensus
Celanese Corporation price-consensus-chart | Celanese Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Bunge Limited (BG - Free Report) , Impala Platinum Holdings Limited (IMPUY - Free Report) and BHP Group (BHP - Free Report) .
Bunge has an expected earnings growth rate of 43% for the current year. The company’s shares have gained around 14% in the past year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Impala Platinum has an expected earnings growth rate of 131.7% for the current fiscal. The company’s shares have rallied around 30% in the past year. It currently carries a Zacks Rank #1.
BHP Group has a projected earnings growth rate of 32.4% for the current fiscal year. The company’s shares have gained around 15% in a year. It currently carries a Zacks Rank #2 (Buy).
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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