Yahoo Finance Celanese (CE) Down 8.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Celanese (CE). Shares have lost about 8.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Celanese due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Celanese's Q1 Earnings Surpass Estimates, Sales Lag
Celanese reported first-quarter 2024 earnings from continuing operations of $1.10 per share, rising from 86 cents in the prior-year quarter.
Adjusted earnings in the first quarter were $2.08 per share, up 3.5% from $2.01 reported a year ago. The bottom line surpassed the Zacks Consensus Estimate of $1.91.
Revenues of roughly $2.61 billion decreased roughly 8.5% year over year and missed the Zacks Consensus Estimate of $2.75 billion.
Segment Highlights
Net sales in the Engineered Materials unit were around $1.38 billion in the reported quarter, down around 15.4% year over year. The figure missed the Zacks Consensus Estimate of $1.68 billion. The segment recorded an operating profit of $89 million and an adjusted EBIT of $201 million in the first quarter. Net sales decreased sequentially, on lower volume and price. Volume was comparable to the previous quarter, with minor improvements in both automotive and distribution volumes, somewhat offset by seasonal declines in medical implants.
The Acetyl Chain segment posted net sales of $1.26 billion, up roughly 0.8% year over year. The figure surpassed the Zacks Consensus Estimate of $1.11 billion. The segment generated an operating profit of $254 million and an adjusted EBIT of $296 million in the first quarter. Volumes were up sequentially as Asia demand increased modestly and the Americas and Europe experienced seasonal recovery. Pricing in the first quarter of the Acetyl Chain rose sequentially.
Financials
Celanese ended the quarter with cash and cash equivalents of roughly $1.48 billion, down roughly 17.9% sequentially. Long-term debt was down around 10.4% sequentially to around $11 billion.
Cash provided by operating activities was $101 million and free cash flow was a negative $40 million in the reported quarter. Capital expenditures amounted to $137 million.
The company returned $77 million to shareholders through dividend payouts during the quarter.
Outlook
Celanese sees adjusted earnings in the band of $2.60 to $3 per share for the second quarter of 2024. The projection includes the expected roughly 30 cents impact from the M&M amortization.
The company expects to deliver higher earnings performance in the second quarter and into the second half of 2024 on further improvement in the profitability of its acquired product portfolio, the benefits from its Clear Lake expansion, Uentrop closure and the SAP S/4HANA ERP integration.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Celanese has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Celanese has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Celanese belongs to the Zacks Chemical - Specialty industry. Another stock from the same industry, Ecolab (ECL), has gained 3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Ecolab reported revenues of $3.75 billion in the last reported quarter, representing a year-over-year change of +5.1%. EPS of $1.34 for the same period compares with $0.88 a year ago.
For the current quarter, Ecolab is expected to post earnings of $1.66 per share, indicating a change of +33.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Ecolab. Also, the stock has a VGM Score of C.
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Celanese Corporation (CE) : Free Stock Analysis Report
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