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Why You Should Add Celanese Corporation (CE) to Your Portfolio
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Celanese Corporation (CE - Free Report) stock looks promising at the moment. The company is benefiting from acquisitions, productivity initiatives and strategic investments.
We are optimistic about the company’s prospects and believe that the time is right to add the stock to the portfolio as it is poised to carry the momentum ahead.
Celanese currently carries a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make this chemical stock an attractive choice for investors right now.
An Outperformer
Shares of Celanese have soared 27.9% over the past year compared with 6.6% rise for the industry.
Image Source: Zacks Investment Research
Estimates Northbound
Over the past three months, the Zacks Consensus Estimate for the current year has increased 8.8% to $18.30, implying year-over-year growth of 139.5%. The consensus mark for 2022 has also been revised around 14% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Impressive Earnings Surprise History
Celanese outpaced the Zacks Consensus Estimate in all of the trailing four quarters, the earnings surprise being 12.65%, on average.
Attractive Valuation
Valuation looks attractive as the company’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
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 a trailing 12-month EV/EBITDA multiple of 8.91, much cheaper than the industry average of 27.61.
Upbeat Prospects
Celanese stands to gain from acquisitions, which should lend support to its earnings. The recently completed takeover of Exxon Mobil's Santoprene Business will broaden the company’s portfolio of engineered solutions and empower it to offer a wider range of solutions to targeted growth areas, including future mobility, medical and sustainability. The buyout of Italy-based SO.F.TER. Group promises opportunities for additional growth, investment and synergies. The acquisition of Nilit's nylon compounding unit is anticipated to catapult the company to a leading position in not only nylon compound supply but also in the engineered materials business as nylon is rapidly being adopted in automotive, consumer and industrial applications. The acquisition of Omni Plastics adds to CE’s global asset base and the Elotex buyout is expected to boost the company’s position in the vinyl acetate ethylene (VAE) emulsions space.
The company is poised to gain on its strategic initiatives, including cost savings through productivity actions and efficiency enhancement and drive margins through productivity and price hike actions and operational improvement. Global supply chain improvements and other productivity initiatives at the Engineered Materials segment are also expected to catalyze earnings. CE expects to deliver $150 million of growth productivity in 2021.
The company is focused on boosting growth in emerging regions, including Asia. Its chemical complex in Nanjing, China, has been propelling growth in Asia. Doubling the capacity of Nanjing’s VAE unit seeks to cater to the high demand for innovative specialty solutions in vinyl-based emulsions. The restart of production at the new VAE unit in Singapore is expected to support demand in Southeast Asia. The company’s investment in a number of capital-efficient VAE expansion and debottlenecking projects are anticipated to strengthen its acetyls business. Its joint ventures with Mitsubishi Gas for increasing Korea Engineering Plastics Co.’s production capacity and enhancing the long-term security of supply and with Pertamina for developing ethanol in Indonesia also bode well. The rise in volumes is expected to reflect in a series of steps in the years to come. The company also looks to expand engineered materials compounding capacities in Asia.
Celanese is committed to strengthening its balance sheet with lowered debt, stronger cash flows and value generation for shareholders. In January 2021, it raised its quarterly cash dividend by 10% to 68 cents a share. It expects to repurchase shares worth $1 billion in 2021. The company returned $376 million to shareholders through dividend payouts and share repurchases during the third quarter of 2021. In its most recent quarter, the company completed several transactions to spread out debt maturities and lower interest expense, including a registered public offering of $400 million of 1.400% Senior Notes due 2026. It anticipates generating a free cash flow of more than $1.2 billion in 2021.
Univar has an expected earnings growth rate of 55.2% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised 9% upward over the past 60 days.
Univar beat the Zacks Consensus Estimate for earnings in the four trailing quarters, with the earnings surprise being 24.1%, on average. UNVR’s shares have rallied 47.8% over a year.
Chemours has an expected earnings growth rate of 105.1% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised 10% upward in the past 60 days.
Chemours beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company delivered a trailing four-quarter earnings surprise of roughly 34.2%, on average. CC has gained 33.8% over a year.
AdvanSix has an expected earnings growth rate of 197% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised 14.1% upward over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in the four trailing quarters, with the earnings surprise being 47%, on average. ASIX’s shares have surged 135.7% over a year.
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Why You Should Add Celanese Corporation (CE) to Your Portfolio
Celanese Corporation (CE - Free Report) stock looks promising at the moment. The company is benefiting from acquisitions, productivity initiatives and strategic investments.
We are optimistic about the company’s prospects and believe that the time is right to add the stock to the portfolio as it is poised to carry the momentum ahead.
Celanese currently carries a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make this chemical stock an attractive choice for investors right now.
An Outperformer
Shares of Celanese have soared 27.9% over the past year compared with 6.6% rise for the industry.
Estimates Northbound
Over the past three months, the Zacks Consensus Estimate for the current year has increased 8.8% to $18.30, implying year-over-year growth of 139.5%. The consensus mark for 2022 has also been revised around 14% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Impressive Earnings Surprise History
Celanese outpaced the Zacks Consensus Estimate in all of the trailing four quarters, the earnings surprise being 12.65%, on average.
Attractive Valuation
Valuation looks attractive as the company’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
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 a trailing 12-month EV/EBITDA multiple of 8.91, much cheaper than the industry average of 27.61.
Upbeat Prospects
Celanese stands to gain from acquisitions, which should lend support to its earnings. The recently completed takeover of Exxon Mobil's Santoprene Business will broaden the company’s portfolio of engineered solutions and empower it to offer a wider range of solutions to targeted growth areas, including future mobility, medical and sustainability. The buyout of Italy-based SO.F.TER. Group promises opportunities for additional growth, investment and synergies. The acquisition of Nilit's nylon compounding unit is anticipated to catapult the company to a leading position in not only nylon compound supply but also in the engineered materials business as nylon is rapidly being adopted in automotive, consumer and industrial applications. The acquisition of Omni Plastics adds to CE’s global asset base and the Elotex buyout is expected to boost the company’s position in the vinyl acetate ethylene (VAE) emulsions space.
The company is poised to gain on its strategic initiatives, including cost savings through productivity actions and efficiency enhancement and drive margins through productivity and price hike actions and operational improvement. Global supply chain improvements and other productivity initiatives at the Engineered Materials segment are also expected to catalyze earnings. CE expects to deliver $150 million of growth productivity in 2021.
The company is focused on boosting growth in emerging regions, including Asia. Its chemical complex in Nanjing, China, has been propelling growth in Asia. Doubling the capacity of Nanjing’s VAE unit seeks to cater to the high demand for innovative specialty solutions in vinyl-based emulsions. The restart of production at the new VAE unit in Singapore is expected to support demand in Southeast Asia. The company’s investment in a number of capital-efficient VAE expansion and debottlenecking projects are anticipated to strengthen its acetyls business. Its joint ventures with Mitsubishi Gas for increasing Korea Engineering Plastics Co.’s production capacity and enhancing the long-term security of supply and with Pertamina for developing ethanol in Indonesia also bode well. The rise in volumes is expected to reflect in a series of steps in the years to come. The company also looks to expand engineered materials compounding capacities in Asia.
Celanese is committed to strengthening its balance sheet with lowered debt, stronger cash flows and value generation for shareholders. In January 2021, it raised its quarterly cash dividend by 10% to 68 cents a share. It expects to repurchase shares worth $1 billion in 2021. The company returned $376 million to shareholders through dividend payouts and share repurchases during the third quarter of 2021. In its most recent quarter, the company completed several transactions to spread out debt maturities and lower interest expense, including a registered public offering of $400 million of 1.400% Senior Notes due 2026. It anticipates generating a free cash flow of more than $1.2 billion in 2021.
Key Picks
Some other top-ranked stocks from the basic materials space are Univar Solutions Inc. , The Chemours Company (CC - Free Report) and AdvanSix Inc. (ASIX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Univar has an expected earnings growth rate of 55.2% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised 9% upward over the past 60 days.
Univar beat the Zacks Consensus Estimate for earnings in the four trailing quarters, with the earnings surprise being 24.1%, on average. UNVR’s shares have rallied 47.8% over a year.
Chemours has an expected earnings growth rate of 105.1% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised 10% upward in the past 60 days.
Chemours beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company delivered a trailing four-quarter earnings surprise of roughly 34.2%, on average. CC has gained 33.8% over a year.
AdvanSix has an expected earnings growth rate of 197% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised 14.1% upward over the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in the four trailing quarters, with the earnings surprise being 47%, on average. ASIX’s shares have surged 135.7% over a year.