Celanese (CE) Stock Up 16% in 3 Months: What's Driving It?
Shares of Celanese Corporation CE have gained 16.5% over the past three months. The company has also outperformed its industry’s decline of 28.7% over the same time frame.
Celanese, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $11.9 billion and average volume of shares traded in the last three months is around 918.2K.
Let’s delve deeper into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
Celanese is benefiting from its productivity actions, investments in high-return organic projects and strategic acquisitions amid a challenging environment due to the coronavirus pandemic. Better-than-expected earnings performance in the second quarter has also contributed to the gain in the company's shares.
The company’s adjusted earnings of $1.30 per share for the second quarter topped the Zacks Consensus Estimate of $1.09. While the company saw demand weakness across automotive, industrial applications and consumer appliances stemming from the pandemic, it benefited from its productivity, pricing and operational improvement actions in the quarter. Celanese, in its second-quarter call, also stated that it witnessed demand recovery in the early third quarter order bookings at improved levels on a sequential-comparison basis.
Celanese remains focused on executing its productivity programs that include 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, it has already achieved $135 million of this productivity target.
The company also expects to generate one-time cost savings of $30-$40 million this year through reductions in travel, manufacturing costs and other corporate function expense. Productivity actions are expected to lend support to its margins in 2020.
Celanese also 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 recent buyout of Elotex also reinforces the company’s position in the vinyl acetate ethylene emulsions space. Celanese is progressing with the integration of the acquisition. The Elotex acquisition is expected to contribute to volumes in the Acetyl Chain segment this year.
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 Barrick Gold Corporation GOLD, Yamana Gold Inc. AUY and Eldorado Gold Corporation EGO.
Barrick Gold has a projected earnings growth rate of 80.4% for the current year. The company’s shares have gained around 56% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Yamana Gold has a projected earnings growth rate of 76.9% for the current year. The company’s shares have rallied roughly 81% in a year. It currently carries a Zacks Rank #2 (Buy).
Eldorado Gold has an expected earnings growth rate of 2,225% for the current year. The company’s shares have gained around 30% in the past year. It presently carries a Zacks Rank #2.
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