Celanese Stock To $36?
Celanese (CE) stock has fallen 5.8% during the past day, and is currently trading at $50.03. Our multi-factor assessment suggests that it may be time to sell CE stock. We have, overall, a pessimistic view of the stock, and a price of $36 may not be out of reach. We believe there are several things to fear in CE stock given its overall Very Weak operating performance and financial condition. Hence, despite its Very Low valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very Low |
| What you get: | |
| Growth | Very Weak |
| Profitability | Very Weak |
| Financial Stability | Weak |
| Downturn Resilience | Very Weak |
| Operating Performance | Very Weak |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $5.5 Bil in market cap, Celanese provides high-performance engineered polymers globally, operating in Engineered Materials, Acetate Tow, and Acetyl Chain segments, and supplies acesulfame potassium sweetener for beverages and food products.
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[1] Valuation Looks Very Low
| CE | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 0.6 | 3.3 |
| Price-to-Earnings Ratio | -1.8 | 25.2 |
| Price-to-Free Cash Flow Ratio | 5.4 | 21.4 |
This table highlights how CE is valued vs broader market. For more details see: CE Valuation Ratios
[2] Growth Is Very Weak
- Celanese has seen its top line grow at an average rate of 0.7% over the last 3 years
- Its revenues have fallen -7.3% from $10 Bil to $9.7 Bil in the last 12 months
- Also, its quarterly revenues declined -8.6% to $2.4 Bil in the most recent quarter from $2.6 Bil a year ago.
| CE | S&P 500 | |
|---|---|---|
| 3-Year Average | 0.7% | 5.6% |
| Latest Twelve Months* | -7.3% | 6.5% |
| Most Recent Quarter (YoY)* | -8.6% | 7.5% |
This table highlights how CE is growing vs broader market. For more details see: CE Revenue Comparison
[3] Profitability Appears Very Weak
- CE last 12 month operating income was $856 Mil representing operating margin of 8.8%
- With cash flow margin of 14.3%, it generated nearly $1.4 Bil in operating cash flow over this period
- For the same period, CE generated nearly $-3.1 Bil in net income, suggesting net margin of about -31.8%
| CE | S&P 500 | |
|---|---|---|
| Current Operating Margin | 8.8% | 18.8% |
| Current OCF Margin | 14.3% | 20.7% |
| Current Net Income Margin | -31.8% | 12.9% |
This table highlights how CE profitability vs broader market. For more details see: CE Operating Income Comparison
[4] Financial Stability Looks Weak
- CE Debt was $13 Bil at the end of the most recent quarter, while its current Market Cap is $5.5 Bil. This implies Debt-to-Equity Ratio of 240.7%
- CE Cash (including cash equivalents) makes up $1.4 Bil of $22 Bil in total Assets. This yields a Cash-to-Assets Ratio of 6.5%
| CE | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 240.7% | 20.3% |
| Current Cash-to-Assets Ratio | 6.5% | 7.2% |
[5] Downturn Resilience Is Very Weak
CE has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- CE stock fell 49.5% from a high of $173.82 on 5 January 2022 to $87.85 on 26 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $171.86 on 31 March 2024 , and currently trades at $50.03
| CE | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -49.5% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
2020 Covid Pandemic
- CE stock fell 52.0% from a high of $123.12 on 1 January 2020 to $59.12 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 9 November 2020
| CE | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -52.0% | -33.9% |
| Time to Full Recovery | 236 days | 148 days |
2008 Global Financial Crisis
- CE stock fell 85.0% from a high of $50.00 on 23 June 2008 to $7.52 on 3 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 May 2011
| CE | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -85.0% | -56.8% |
| Time to Full Recovery | 798 days | 1,480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CE Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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