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Category: Stock Market and Celanese
Date: 11 October 2019 Stock Price: $118.36 We take a look at the 2nd quarter earnings report of their 2019 fiscal year of Celanese, a chemicals and speciality products maker that employs roughly 7 500 people across the world.
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About Calenese Corporation
Celanese Corporation (NYSE: CE), a global chemical and specialty materials company. We produce products that make our lives a little easier, by helping customers to bring their inspired ideas and innovations to life. From the global production network of our Acetyl Chain, we provide materials that are critical to the global chemicals and paints and coatings industries. From our broad portfolio of Materials Solutions, we advance automotive and consumer electronic designs and enable life-improving medical, food and beverage products – we offer solutions to our customers to help them succeed.
While we call Dallas, Texas home for our headquarters, we have approximately 7,500 employees working to serve our customers around the world. From Dallas to Amsterdam to Shanghai, we manage a global network of commercial offices, technical centers, and twenty-seven production facilities and additional strategic affiliate production facilities.
While we call Dallas, Texas home for our headquarters, we have approximately 7,500 employees working to serve our customers around the world. From Dallas to Amsterdam to Shanghai, we manage a global network of commercial offices, technical centers, and twenty-seven production facilities and additional strategic affiliate production facilities.
Overview of Celanese's latest earnings report
Data below is reported for the latest quarter unless stated otherwise
- Sales: $1.592 billion (down from $1.844 billion for the same quarter of the previous year)
- Sales decreased by -15.49% over the last 12 months
- Cost of sales: $1.169 billion (down from $1.323 billion for the same quarter of the previous year)
- Cost of sales decreased by -11.6% over the last 12 months
- Net income: $209 million (down from $344 million for the same quarter of the previous year)
- Diluted earnings per share: $1.66 (down from $2.52 for the same quarter of the previous year)
- PE ratio: 17.7
- Diluted weighted-average shares outstanding: 125.847 million (down from 135.589 million for the same quarter of the previous year)
- Cash and equivalents: $491 million
- Cash and equivalents per share: $3.91
- Cash and equivalents makes up 3.3% of Celanese's market capital
- Cash and equivalents makes up 5.16 % of Celanese's total assets
- Inventories: $1.011 billion
- Inventories makes up 10.6% of Celanese's total assets
- Stockholders equity: $3.254 billion
- Stockholders equity per share: $25,85
- So Celanese is trading times its stockholders equity per share which is 4.5 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
- Cash generated from operations: $731 million
- Cash generated from operations per share (for the 6 months): $5.81
Celanese's management commentary on the results and outlook
Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, reported second quarter GAAP diluted earnings per share of $1.67 and adjusted earnings per share of $2.38 on net sales of $1.6 billion. Celanese delivered solid performance, amid a backdrop of weak demand and accelerated destocking, by exercising its differentiated business models in the Acetyl Chain and Engineered Materials, and demonstrating a stable Acetate Tow earnings profile. In the second quarter, the Company generated operating cash flow of $424 million and free cash flow of $356 million, and returned $378 million to shareholders through $300 million in share repurchases and $78 million in dividends. With an expectation for improved demand fundamentals as the year progresses, the Company reaffirmed its full year 2019 guidance for adjusted EPS.
Outlook
"Our teams successfully executed on the unique business models we have in place to again deliver solid earnings performance amid a very challenging economic backdrop," said Lori Ryerkerk, chief executive officer. "The Acetyl Chain flexed its global network to drive incremental value downstream and deliver robust foundational earnings despite weak industry fundamentals. Engineered Materials worked the project pipeline model to deliver results in excess of underlying end market demand conditions. Acetate Tow again displayed a stabilized earnings profile, generating adjusted earnings consistent with last quarter. Looking forward, we continue to see a path to 2019 adjusted earnings of approximately $10.50 per share based on an expectation that underlying fundamentals will improve as we progress through the end of the year. We continue to strengthen our businesses by executing on our continuous productivity programs and strategically investing in high-return organic projects.
"Our teams successfully executed on the unique business models we have in place to again deliver solid earnings performance amid a very challenging economic backdrop," said Lori Ryerkerk, chief executive officer. "The Acetyl Chain flexed its global network to drive incremental value downstream and deliver robust foundational earnings despite weak industry fundamentals. Engineered Materials worked the project pipeline model to deliver results in excess of underlying end market demand conditions. Acetate Tow again displayed a stabilized earnings profile, generating adjusted earnings consistent with last quarter. Looking forward, we continue to see a path to 2019 adjusted earnings of approximately $10.50 per share based on an expectation that underlying fundamentals will improve as we progress through the end of the year. We continue to strengthen our businesses by executing on our continuous productivity programs and strategically investing in high-return organic projects.
Celanese (NYSE: CE) stock price history
The image below, obtained from Google, shows the stock price history of Celanese over the last 5 years. And it's been a very good time for Celanese stockholders. 5 years ago it was trading at $51.10 and its currently trading at around $118.36 a stock. That's a return of 131.6% provided to Celanese stockholders over the last 5 years. The stock of Celanese is trading at a lot closer to its 52 week high of $127.15 than it is to its 52 week low of $82.91 which to us is a clear indication that the short term sentiment and momentum of Celanese stock is very positive.
Celanese (NYSE: CE) latest stock valuation
So what is Celanese stock worth based on the release of their latest earnings report? Based on Celanese latest earnings report provided our valuation model provides a target (full value) price at $106.20 a Celanese stock. We therefore believe that the stock of Celanese is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $106.20. Therefore we see a good entry point into Celanese stock at $95.40or below. We expect the stock of Celanese to pull back from current levels in coming weeks and months to more realistic valuation levels closer to our target price for .Celanese .
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $106.20. Therefore we see a good entry point into Celanese stock at $95.40or below. We expect the stock of Celanese to pull back from current levels in coming weeks and months to more realistic valuation levels closer to our target price for .Celanese .