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Here's Why You Should Invest in Celanese (CE) Stock Now

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·5 min read
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  • CE
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Celanese Corporation CE is gaining from its productivity measures, investments in organic projects and strategic acquisitions. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s take a look into the factors that make this leading chemical and specialty materials maker an intriguing choice for investors right now.

An Outperformer

Shares of Celanese, a Zacks Rank #2 (Buy) stock, have gained 16.4% year to date, outperforming the 5.3% rise of its industry.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Estimates Going Up

Over the past three months, the Zacks Consensus Estimate for earnings for Celanese for the current year has increased around 8.8%. The consensus estimate for fourth-quarter 2021 has also been revised 35.7% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Positive Earnings Surprise History

Celanese has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of 12.7%, on average.

Solid Growth Prospects

The Zacks Consensus Estimate for earnings for the current year for Celanese is currently pegged at $18.30, reflecting an expected year-over-year growth of 139.5%. Moreover, earnings are expected to register a 140.2% growth in fourth-quarter 2021.

Superior Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Celanese is 42.8%, above the industry’s level of 15.6%.

Growth Drivers in Place

Celanese is benefiting from its cost and productivity actions, investments in high-return organic projects and synergies of acquisitions. The company is also gaining from higher demand in most of its end markets.

The company, in its third-quarter call, stated that demand for its products remains strong in most end markets as it enters the fourth quarter. It sees pent-up demand across Engineered Materials and Acetyl Chain units to more than offset any impact of typical year-end seasonality. Notwithstanding the sourcing and logistics headwinds, the company expects to deliver fourth-quarter adjusted earnings of roughly $5.00 per share.

The company 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 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 will also broaden the company’s portfolio of engineered solutions.

With the anticipated closing of the Santoprene acquisition in the fourth quarter, Celanese expects to have deployed more than $2.7 billion in 2021 on merger and acquisitions, organic investments and share repurchases to drive future earnings growth. The company said that these actions position it well in a strong demand environment

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 2021.

The company also continues to generate strong cash flows and is focused on boosting shareholders’ value. It returned $376 million to shareholders through dividend payouts and share repurchases during the third quarter of 2021. It expects to generate more than $1.2 billion in free cash flows in 2021.

Celanese Corporation Price and Consensus

Celanese Corporation Price and Consensus
Celanese Corporation Price and Consensus

Celanese Corporation price-consensus-chart | Celanese Corporation Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, AdvanSix Inc. ASIX and Intrepid Potash, Inc. IPI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 12.9% upward over the last 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 34% in a year.

AdvanSix has a projected earnings growth rate of 196.9% for the current year. ASIX's consensus estimate for the current year has been revised 6.8% upward over the last 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 149% in a year.

Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the last 60 days.

Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 203% in a year.


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