Celanese Corp. - Momentum

Celanese Corp. (CE) recently jumped to a new multi-year high at $39.99 after reporting strong Q3 results in late October that included a 19% earnings surprise. With four consecutive earnings surprises and a bullish growth projection, this Zacks #1 rank stock has been thoroughly coated in momentum.

Company Description

Celanese Corp. operates as a specialty chemical maker worldwide. The company was founded in 2004 and has a market cap of $6 billion.

Celanese has rebounded nicely out of the global recession, recently hitting a new multi-year high after reporting strong Q3 results on Oct 26 that easily beat expectations.

Third-Quarter Results

Revenue for the period was up 15% from last year to $1.51 billion. Earnings also came in strong at 88 cents, 19% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 12% over the last four quarters.

Celanese saw its biggest gains from its Advanced Engineered segment, where sales were up 18% from last year to $271 million. It's largest segment, Acetyl Intermediates, also booked a strong performance, with sales increasing 15% to $777 million.

Balance Sheet

Although the company operates in a capital intensive business, it continues to chip away at its debt, falling $224 million from last year to $3.91 billion against cash and equivalents of $884 million.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year adding 18 cents to $3.33 and the next-year estimate gaining 15 cents to $3.85, a bullish 16% growth projection.

Valuation

But in spite of the recent gains, CE still has value, trading with a forward P/E of 11.5X, a nice discount to the industry average of 15X.

6-Month Chart

CE has been surging with the market since early September, recently hitting a new multi-year high at $39.99 on the good quarter. The stochastic below the chart is signaling that shares are trading below over-bought territory. Look for support from the short-term trend line on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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