Celanese (CE) Stock Up 20% In 6 Months: What's Driving It?

Shares of Celanese Corporation (NYSE:CE) have rallied around 20% over the past six months. The company has also outperformed its industry’s rise of roughly 17% over the same time frame.

Celanese, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $13.2 billion and average volume of shares traded in the last three months was around 1,075.5K. 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

Celanese is benefiting from its inorganic growth actions, strength of its commercial models and growth investments. The company’s strategic measures including cost savings through productivity initiatives, price increase actions and operational improvement are expected to support its earnings in 2019.

Celanese 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 poised for growth on the back of acquisitions, new business wins, growth in Asia and significant project commercialization.

Celanese 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 continues to invest in its businesses and further expand its capability to boost growth and create value for shareholders.

The company also continues to generate strong cash flows and remains focused on returning value to its shareholders. It generated operating cash flow of $307 million and free cash flow of $224 million during the first quarter. Celanese returned $270 million to shareholders through dividends and share repurchases during the quarter.

Celanese, in April 2019, also raised its quarterly cash dividend by 15% to 62 cents per share. This marked the tenth straight year of dividend increases. The company’s board also approved a new $1.5 billion share repurchase authorization.

Celanese Corporation Price and Consensus

Celanese Corporation price-consensus-chart | Celanese Corporation Quote

Stocks Worth a Look

Stocks worth considering in the basic materials space include AngloGold Ashanti Limited (NYSE:AU) , Materion Corporation (NYSE:MTRN) and Flexible Solutions International Inc (NYSE:FSI) .

AngloGold Ashanti has an expected earnings growth rate of 90.6% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have rallied around 74% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Materion has an expected earnings growth rate of 27.3% for the current year and carries a Zacks Rank #1. The company’s shares have gained around 13% over the past year.

Flexible Solutions has an expected earnings growth rate of 342.9% for the current year and carries a Zacks Rank #1. The company’s shares have surged 137% in a year’s time.

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