Celanese Corporation Faces Major Stock Challenges Amid Disappointing Earnings
Market Performance Declines Significantly
Irving, Texas-based Celanese Corporation (CE) is known as a global hybrid chemical company. It specializes in producing and selling high-performance engineered polymers along with other chemicals and specialty materials. With a market capitalization of $8.2 billion, Celanese operates through its two key segments: Engineered Materials and Acetyl Chain.
Over the past year, Celanese has not kept pace with the broader market. CE stock has declined 51.9% year-to-date (YTD) and 43.3% over the past year. In contrast, the S&P 500 Index ($SPX) surged by 25.2% in 2024 and 31% in the last year.
Underperformance Compared to Sector Peers
Narrowing the focus, Celanese has also trailed behind the Materials Select Sector SPDR Fund’s (XLB) YTD gains of 10% and its 16.5% returns over the past year.
Disappointing Earnings Report Impacts Stock Prices
After an underwhelming Q3 earnings report on November 4, Celanese stock prices fell 26.3%. In fact, CE stock has dropped over 43.1% in just the past month, reaching a 52-week low of $71.38 on November 20. The company reported a 2.8% decline in net sales to $2.6 billion compared to last year, which did not meet Wall Street’s expectations. Furthermore, Celanese’s adjusted earnings per share (EPS) was $2.44, missing analysts’ estimates by 14.1%. Looking ahead, the company anticipates worsening demand in Q4, projecting an adjusted EPS of just $1.25 for the quarter.
Financial Structure Concerns Lead to Dividend Cuts
Celanese is also grappling with issues related to its capital structure. Although it managed to reduce its long-term debt compared to last year, its financial leverage remains high after the acquisition of Mobility and Materials. To improve its financial health, the company plans to cut its quarterly dividend by approximately 95% starting in Q1 2025, a move that has unsettled investors.
Analysts Predict Declining Earnings Ahead
For the current fiscal year, which ends in December, analysts expect CE to report a 2.8% drop in adjusted EPS to $8.67. Celanese has a history of disappointing earnings surprises; it exceeded analysts’ expectations only once in the past four quarters while missing on three occasions.
Current Analyst Sentiment and Ratings
CE stock currently holds a “Hold” consensus rating among analysts. Out of 17 analysts, two recommend a “Strong Buy,” one suggests a “Moderate Buy,” ten advise “Hold,” one supports “Moderate Sell,” and three favor a “Strong Sell” rating.
Recent Changes in Analyst Recommendations
Analyst sentiment has turned bearish compared to three months ago when analysts held a consensus “Moderate Buy” rating. At that time, five analysts had even recommended a “Strong Buy.”
On November 11, BMO Capital analyst John McNulty downgraded CE to a “Sell” rating, reducing the price target to $76, which reflects only a 1.7% upside from current prices.
Despite the challenges, CE’s average price target of $108.06 suggests a 44.7% potential upside. The highest target, set at $170, indicates an ambitious upside of 127.6%.
On the date of publication, Aditya Sarawgi held no positions, directly or indirectly, in any of the securities mentioned in this article. All information and data are for informational purposes only. For more details, please consult the Barchart Disclosure Policy here.
The opinions expressed in this article belong solely to the author and may not reflect those of Nasdaq, Inc.
