Celanese (CE) Up 23% in 3 Months: What’s Behind the Rally?

Shares of

Celanese Corporation


CE

have popped 22.7% over the past three months. The company has also outperformed its

industry

’s rise of 11.9% over the same time frame.

Celanese, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $14.5 billion and average volume of shares traded in the last three months is around 746.3K.

Let’s delve deeper into the factors behind the stock’s price appreciation.

What’s Favoring the Stock?

Celanese is benefiting from its productivity actions, investments in high-return organic projects and strategic acquisitions amid a challenging environment due to the coronavirus pandemic. Better-than-expected earnings performance in the third quarter has also contributed to the run-up in the company’s shares.

The company’s adjusted earnings of $1.95 per share for the third quarter topped the Zacks Consensus Estimate of $1.69. Revenues of $1,411 million also surpassed the Zacks Consensus Estimate of $1,360.7 million. The company benefited from strong demand recovery in the quarter.

The company, last month, stated that global demand during the third quarter progressed toward recovery across most of its end markets. It expects the momentum it witnessed in the third quarter to continue in the fourth quarter. The company remains focused on controllable actions to drive strong growth next year amid uncertainties.

Celanese remains committed to execute its productivity programs that include the implementation of a number of cost reduction capital projects. The company expects to achieve gross savings of $200 million from its productivity actions in 2020. Notably, it has already attained $166 million of this productivity target. Productivity actions are expected to lend support to its margins in 2020.

Earnings estimate revisions also have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for Celanese for the current year has increased around 2.8%. The consensus estimate for 2021 has also been revised 1.9% upward over the same time frame.

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include

Agnico Eagle Mines Limited


AEM

,

Barrick Gold Corporation


GOLD

and

AngloGold Ashanti Limited


AU

.

Agnico Eagle has a projected earnings growth rate of 103.1% for the current year. The company’s shares have gained around 26% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see


the complete list of today’s Zacks #1 Rank stocks here


.

Barrick Gold has an expected earnings growth rate of 115.7% for the current year. The company’s shares have surged around 56% in the past year. It currently carries a Zacks Rank #2 (Buy).

AngloGold has a projected earnings growth rate of 150.6% for the current year. The company’s shares have gained roughly 18% in a year. It currently carries a Zacks Rank #2.

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