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Celanese (CE) Up 29% in a Year: What's Driving the Stock?

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Celanese Corporation’s CE shares have gained 28.8% over the past year. The company has also outperformed its industry’s decline of 1.6% over the same time frame. It has also topped the S&P 500’s 23.7% rise over the same period.

Let’s dive into the factors behind this chemical maker’s stock price appreciation.

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What’s Favoring CE?

Celanese, a Zacks Rank #3 (Hold) stock, 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 recently completed purchase of Exxon Mobil's Santoprene business also broadens the company’s portfolio of engineered solutions and enables it to offer a wider range of functionalized solutions to targeted growth areas, including future mobility, medical and sustainability. Celanese expects the acquisition to be immediately accretive to its 2022 adjusted earnings per share and free cash flow.

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.

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. The company expects to generate more than $1.2 billion in free cash flows for full-year 2021.

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Commercial Metals Company CMC, Albemarle Corporation ALB and AdvanSix Inc. ASIX, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals has a projected earnings growth rate of 10.5% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 6.6% upward over the past 60 days.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 7.4%, on average. CMC has rallied around 72% in a year.

Albemarle has an expected earnings growth rate of 51.3% for the current year. ALB's consensus estimate for the current year has been revised 5.4% upward over the past 60 days.

Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 22.1%. ALB shares have gained around 26% over the past year.

AdvanSix has an expected earnings growth rate of 3.9% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 2% upward in the past 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 97% in a year.


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