Stock to Watch For Earnings: Celanese Corporation (NYSE:CE)

Celanese Corporation (NYSE:CE) reported earnings for the three months ended Mar2016 on April 18, 2016. The company earned $1.83 per share on revenue of $1.4B. Analysts had been modeling earning per share of $1.49 with $1.39B in revenue.

Celanese Corporation (CE) on April 18, 2016 reported first quarter 2016 adjusted earnings per share of $1.83. We were able to generate these strong results in a challenging environment by leveraging the strength of our core operating models and through our commitment to productivity. In Materials Solutions, we continued our momentum of closing new projects that add meaningful value to our customers by combining chemistry with our applications expertise. In the Acetyl Chain, we leveraged our integrated value chain to capture opportunities and maximize value in a challenging and dynamic market environment.

First Quarter 2016 Highlights:

• Record adjusted earnings per share of $1.83, an increase of 6 percent over the prior year


• Adjusted EBIT of $358 million and margin of 25.5 percent, both record performances


• Record core income and margin performance in Materials Solutions


• Free cash flow of $217 million, the highest ever first quarter performance


• Received U.S. Environmental Protection Agency’s prestigious 2016 ENERGY STAR Partner of the Year Award, which recognizes industrial companies that perform at a superior level of energy management across their organizations


• Expanded engineered materials product portfolio with the addition of Nylon 6 and Nylon 6/6 using differentiated technology developed by Celanese


• Announced expansion of vinyl acetate ethylene (VAE) portfolio in Nanjing, China, with the addition of Celvolit 149HV. This new offering is available for most general adhesive applications, is formaldehyde-free and provides high viscosity along with excellent heat resistance and adhesion performance

First Quarter Business Segment Overview

Materials Solutions

Materials Solutions generated record core income of $226 million and expanded margin by 360 basis points year over year to 38.0 percent, its highest performance ever. Engineered Materials (Advanced Engineered Materials excluding affiliates) adjusted EBIT increased by 46 percent year over year, driven by success of our operating model. Advanced Engineered Materials volumes grew 5 percent versus the prior year quarter, as we worked closely with our customers to develop innovative solutions that address their critical needs. During the quarter, we continued the momentum of our opportunity pipeline, launching over 300 new projects. Affiliate earnings declined $12 million versus the prior year, driven by lower prices for MTBE which impacted the Ibn Sina joint venture.

Segment income in Consumer Specialties was $106 million, 15 percent higher than the prior year. Volumes increased 17 percent versus the prior year, as the first quarter of 2015 was impacted by significant destocking in acetate tow. Pricing was down 9 percent year over year due to low industry utilization rates in tow, but was more than offset by volume, productivity gains and lower energy costs.

Celanese Corporation earnings per share showed a decreasing trend of -50.3% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 714%.Analysts project EPS growth over the next 5 years at 9.49%. It has EPS annual decline over the past 5 fiscal years of -5.7% when sales declined -0.8. It reported -3.2% sales drop, and 12.7% EPS growth in the last quarter.

The stock is trading at $70.48, up 31.59% from 52-week low of $54.35. The stock trades down -4.98% from its peak of $74.55 and 9.25% above the consensus price target of $77. Its volume clocked up at 0.91 million shares which is higher than the average volume of 0.82 million shares. Its market capitalization currently stands at $10.47B.