Celanese (CE) Up 27% in 6 Months: What's Driving the Stock?

Shares of Celanese Corporation CE have popped 26.6% over the past six months. The company has also outperformed its industry’s rise of 6.6% over the same time frame. Moreover, it has outpaced the S&P 500’s rise of 9.9%.

Celanese, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $15.2 billion and average volume of shares traded in the last three months was around 804.6K. The company has an expected long-term earnings per share growth rate of 7.1%.

 

Let’s delve deeper into the factors behind the stock’s price appreciation.

What's Working in CE’s Favor?

Better-than-expected earnings performance in the third quarter has contributed to the gain in Celanese’s shares. The company’s adjusted earnings of $2.53 a share for the quarter topped the Zacks Consensus Estimate of $2.50. While demand weakness across a number of end-markets including automotive and electronics impacted Celanese’s performance, the company benefited from its productivity and operational improvement actions.

Celanese is benefiting from its inorganic growth actions, productivity measures and growth investments in organic projects amid a challenging demand environment. The company is committed to execute its productivity programs that include implementation of a number of cost reduction capital projects.

The company commercialized 1,315 projects during the third quarter, which contributed to its volume growth on a sequential comparison basis. It is on track to commercialize more than 4,000 projects in 2019.    

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 significantly contribute to earnings expansion in the company's Engineered Materials segment.

The company is also implementing several process improvement projects across a global network of acetyls manufacturing plants. All these positions its Acetyl Chain unit for solid growth.

Celanese is also committed toward rewarding its shareholders with dividends and share buybacks, leveraging solid free cash flow generation. The company generated operating cash flow of $397 million and free cash flow of $315 million during the third quarter. It returned $352 million to shareholders through dividends and share repurchases during the quarter. Celanese has already returned $1 billion to shareholders this year.

Celanese Corporation Price and Consensus

 

Celanese Corporation Price and Consensus

Celanese Corporation price-consensus-chart | Celanese Corporation Quote

 

Stocks Worth a Look

A few better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited AEM, Kirkland Lake Gold Ltd. KL and Franco-Nevada Corporation FNV, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied roughly 64% in a year’s time.

Kirkland Lake Gold has projected earnings growth rate of 96.3% for the current year. The company’s shares have surged around 146% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 46.2% for the current year. The company’s shares have shot up roughly 47% in a year’s time.

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