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Celanese (CE) Shares Up 27% YTD: What’s Driving the Stock?


Shares of Celanese Corporation CE have popped around 27% year to date. The company has also outperformed its industry’s gain of 17.4% to over the same time frame.

Celanese, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $13.7 billion. Average volume of shares traded in the last three months is around 872.5k. The company has expected long-term earnings per share growth rate of 8%.

Let’s take a look into the factors that are driving this chemical maker’s stock.

Driving Factors

Forecast-topping earnings performance in the first two quarters of 2017 and an upbeat outlook for the full year have contributed to a rally in Celanese’s shares. The company delivered positive earnings surprise of 5.6% and 2.9% in the first and second quarter of 2017, respectively.

Celanese, in July, also raised its earnings outlook for 2017 on the back of strong second-quarter results. The company now expects its adjusted earnings to rise 9–11% in 2017, compared with its prior view of 8–11%.

The company expects its Advanced Engineered Materials unit to generate strong earnings growth driven by an exciting project pipeline and early success from the integration recent acquisitions. It also expected the Acetyl Chain division to drive earnings growth in the second half of 2017.

The company’s strategic initiatives, including operational cost savings through productivity actions and efficiency enhancement, are expected to provide an impetus to earnings. Celanese has identified productivity opportunities of $100 million for 2017 through the execution of numerous projects.

Celanese is also well placed to gain from acquisitions. The purchase of Italy-based SO.F.TER. Group has strengthened Celanese’s solutions capability and project pipeline. SO.F.TER. Group’s modern manufacturing facilities and product portfolio will also offer opportunities for additional growth, investment and synergies. Moreover, the acquisition of Nilit's nylon compounding unit is in sync with Celanese’s plans to become a leading, global nylon compound supplier.

In the last reported quarter, about 547 projects were commercialized, an all-time high, driven by the organic opportunity pipeline and the Nilit and SO.F.TER acquisitions.

Celanese’s shares also got a boost after it inked a deal with Blackstone BX, a leading investment firm, to form an acetate tow joint venture (JV). In June, Celanese and funds managed by Blackstone entered into an agreement to form a JV that will create a global acetate tow supplier, where the former will own 70% of the JV and Blackstone the remaining 30%.

The JV will have an expanded global production footprint including eight fully-owned manufacturing plants and three existing JV sites. The new company, which is expected to generate 2017 annual pro-forma revenues of around $1.3 billion, will be well placed to more efficiently address customers’ needs and offer the best of quality and services. The integration of technology and complementary tow assets will also result in synergies, primarily from optimization of supply chain networks and procurement of raw materials, energy, equipment and other services.

Celanese Corporation Price and Consensus

Celanese Corporation Price and Consensus | Celanese Corporation Quote

Stocks to Consider

Stocks in the basic materials space worth considering include Kraton Corporation KRA and Kronos Worldwide, Inc. KRO, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kraton has expected earnings growth of 7.2% for the current year.

Kronos has expected long-term earnings growth of 5%.

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