Celanese (CE) Bumps Up Dividend Post Strong Q1 Earnings

Celanese Corporation’s (NYSE:CE) board has approved a 17% hike in its quarterly cash dividend to 54 cents per share from the prior payout of 46 cents. This translates into a dividend of $2.16 per share on an annualized basis, up from $1.84 per share. The revised dividend is effective immediately.

The move marks the ninth straight year of dividend hikes and reflects the company’s strong cash generation and its confidence in the growth prospects of its businesses.

Celanese continues to generate strong cash flows and remains focused on returning value to its shareholders. During 2017, the company returned $741 million to its shareholders, including $241 million in dividends and $500 million in share buybacks.

Celanese has outperformed the industry in a year’s time. While shares of the company have rallied around 24.5%, the industry gained roughly 14.1% over the same period.

Celanese recently posted strong first-quarter 2018 results. The company logged earnings from continuing operations of $2.68 per share for the first quarter, a roughly two-fold increase from $1.30 per share a year ago. Adjusted earnings of $2.79 per share surged 54% from $1.81 per share posted a year ago, topping the Zacks Consensus Estimate of $2.36.

Revenues jumped roughly 26% year over year to $1,851 million, also surpassing the Zacks Consensus Estimate of $1,696 million. The company benefited from gains across its Engineered Materials (EM) and Acetyl Chain units in the quarter. Improving industry fundamentals and the strength of the company’s commercial models also supported the results.

Celanese generated operating cash flow of $143 million and free cash flow of $55 million in the first quarter. Moreover, the company returned $63 million to shareholders through dividends in the quarter.

Celanese raised its earnings guidance for 2018 based on strength across its Acetyl Chain and EM units. The company now envisions its adjusted earnings per share to grow in the 20-25% range year over year in 2018, up from its earlier view of 12-16% growth.

Celanese carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Other companies in the basic materials space worth considering include Kronos Worldwide, Inc. (NYSE:KRO) , Methanex Corporation (NASDAQ:MEOH) and Eastman Chemical Company (NYSE:EMN) .

Kronos sports a Zacks Rank #1 (Strong Buy) and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 53% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex carries a Zacks Rank #2 and has an expected long-term earnings growth rate of 15%. Its shares have gained around 49% over a year.

Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2. Its shares have gained around 38% over a year.

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