Why Is Celanese (CE) Up 10% Since Last Earnings Report?
It has been about a month since the last earnings report for Celanese (CE). Shares have added about 10% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Celanese due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Celanese's Earnings and Revenues Miss Estimates in Q4
Celanese reported fourth-quarter 2023 earnings from continuing operations of $6.43 per share, down 8.5% from $7.03 reported in the prior-year quarter.
Adjusted earnings in the fourth quarter were $2.24 per share, up from $1.44 reported in the prior year. It lagged the Zacks Consensus Estimate of $2.29.
Revenues of roughly $2.57 billion increased roughly 9.4% year over year but missed the Zacks Consensus Estimate of $2.61 billion.
Segment Highlights
Net sales in the Engineered Materials unit were roughly $1.41 billion in the reported quarter, up around 13.7% year over year. The figure fell short of our estimate of $1.59 billion. Sales rose year over year due to higher volumes, which offset lower prices. Pricing declined due to tough competition and product mix challenges in the Americas and Europe.
The Acetyl Chain segment posted net sales of $1.18 billion, up roughly 4.1% year over year. The figure topped our estimate of $987.1 million. The year-over-year sales growth was driven by higher volumes.
FY23 Results
Earnings, as adjusted, for full-year 2023 were $8.92 per share compared with $15.88 a year ago. Net sales rose 13.1% to roughly $10.9 billion.
Financials
Celanese reported $1.9 billion in operating cash flow and $1.3 billion in free cash flow for 2023, with $568 million in capital expenditures.
It returned $305 million in cash to shareholders in dividends in 2023.
Outlook
Celanese expects adjusted earnings of $1.75-$2.00 per share for the first quarter of 2024. The projection includes the expected roughly 30 cents impact from the M&M amortization.
The company anticipates a significant rise in earnings per share year over year in 2024 due to M&M synergy capture, Clear Lake acetic acid and methanol expansions, lower interest expenses from deleveraging, and lower inventory costs.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -24.51% due to these changes.
VGM Scores
At this time, Celanese has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Celanese has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Celanese belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Linde (LIN), has gained 6.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Linde PLC reported revenues of $8.3 billion in the last reported quarter, representing a year-over-year change of +5.1%. EPS of $3.59 for the same period compares with $3.16 a year ago.
For the current quarter, Linde PLC is expected to post earnings of $3.68 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days.
Linde PLC has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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