Celanese (CE) Gains on Acquisitions & Productivity Actions
Celanese Corporation CE is benefiting from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions amid headwinds from demand softness.
Shares of this leading chemical and specialty materials maker are down 9.8% over a year compared with the 9.2% rise of its industry.
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Celanese, a Zacks Rank #3 (Hold) stock, is gaining from its productivity measures, investments in organic projects and strategic acquisitions.
The company is actively pursuing 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.
The purchase of Exxon Mobil's Santoprene business also broadens the company’s portfolio of engineered solutions and enables it to offer a wider range of functionalized solutions to targeted growth areas, including future mobility, medical and sustainability.
The acquisition of the majority of DuPont’s Mobility & Materials (“M&M”) business also enables Celanese to enhance its growth in high-value applications. The company expects M&M to contribute $130-$140 million to its operating EBITDA in second-quarter 2023.
Celanese also remains focused on executing its productivity programs that include the implementation of a number of cost reduction capital projects. Productivity actions are expected to support to its margins in 2023.
Moreover, the company continues to generate strong cash flows and is focused on boosting shareholders’ value. It generated operating cash flow of $1.8 billion and free cash flow of $1.3 billion in 2022. Celanese also returned $297 million to shareholders through dividend payouts during 2022. It also paid dividend worth $76 million during the first quarter of 2023.
However, CE faces headwinds from weaker demand and destocking. While the conditions improved in China and Europe in the first quarter of 2023, demand moderated in the Americas towards the end of the first quarter and is expected to remain sluggish in the second quarter. Celanese is also seeing destocking in the Americas that continued into the second quarter. This might impact performance in the second quarter. Weaker demand recovery globally and destocking are likely to weigh on the company’s volumes and pricing.
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 L.B. Foster Company FSTR, Gold Fields Limited GFI and Linde plc LIN.
L.B. Foster currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for FSTR's current-year earnings has been stable over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
L.B. Foster’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 140.5%, on average. FSTR has gained around 7% in a year.
Gold Fields currently carries a Zacks Rank #1. The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days.
The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, reflecting an expected year-over-year growth of 8.3%. Gold Fields’ shares have rallied roughly 58% in the past year.
Linde currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 4.4% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 25% in the past year.
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