Celanese (CE) Stock Rises 15% In 3 Months: What's Driving It?
Zacks Investment Research | Aug 22, 2019 07:26AM ET
Shares of Celanese Corporation (NYSE:CE) have popped around 15% over the past three months. The company has also outperformed its industry ’s rise of roughly 3% over the same time frame.
Celanese, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $14 billion and average volume of shares traded in the last three months was around 975.6K. The company has an expected long-term earnings per share growth rate of 10%.
Let’s take a look into the factors that are driving this leading chemical and specialty materials maker.
Driving Factors
Better-than-expected earnings performance in the second quarter and compelling business prospects has contributed to the gain in Celanese’s shares. The company’s adjusted earnings of $2.38 a share for the second quarter topped the Zacks Consensus Estimate of $2.36.
Celanese backed its adjusted earnings per share guidance of roughly $10.50 for 2019, considering that underlying fundamentals will improve later this year.
The company noted that it will remain focused on strengthening its businesses by executing its productivity programs and strategically investing in high-return organic projects.
Celanese is gaining from its inorganic growth actions, productivity measures and growth investments in organic projects amid a challenging environment. Its strategic measures including cost savings through productivity initiatives, price increase actions and efficiency enhancement are expected to support its earnings in 2019. Celanese is committed to execute its productivity programs that include implementation of a number of cost reduction capital projects.
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 (EM) segment.
The acquisition of Next Polymers also complements Celanese’s growing business in India and strengthens its position as a leader in India’s engineering thermoplastics (ETP) market. The buyout further expands the company’s global manufacturing footprint and offers customers with wide range of polymer products.
The company’s EM unit is also poised to benefit from new business wins and significant project commercialization. The company commercialized 1,177 projects during the second quarter. It is on track to commercialize more than 4,000 projects in 2019.
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Moreover, Celanese remains committed toward rewarding its shareholders with dividends and share buybacks leveraging solid free cash flow generation. The company generated operating cash flow of $424 million and free cash flow of $356 million during the second quarter. It returned $378 million to shareholders through dividends and share repurchases during the quarter.
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