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An Investor’s Guide to Celanese’s Leverage

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Part 5
An Investor’s Guide to Celanese’s Leverage PART 5 OF 5

Can Celanese Continue Its Strong Run?

Celanese’s stock performance

Year-to-date through September 28, 2017, Celanese (CE) stock has given impressive returns to its investors. Year-to-date, CE has gained 32.5% and has outperformed the SPDR S&P 500 ETF (SPY).

CE has outperformed its peers Eastman Chemical (EMN) and LyondellBasell (LYB), which have returned 19.6% and 16.3%, respectively. However, Westlake Chemical (WLK) has outperformed CE with a return of 49.2% for the same period.

Can Celanese Continue Its Strong Run?

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Celanese’s strong performance was primarily driven by the better-than-expected earnings in 1H17, and this trend is expected to continue. Further, it made an upward revision to its adjusted EPS (earnings per share) for fiscal 2017 to be 9%–11% over the previous year compared with its earlier guidance range of 8%–11%.

Other positive developments include the completion of the Nylon Compounding division of NILIT Ltd. CE also signed an agreement for a 70/30 joint venture with Blackstone. It also announced a $1.5 billion share repurchase program that adds value to the existing shareholders and drives the future growth. These actions have helped push its stock price up.

Moving average and RSI

Celanese’s strong performance resulted in its stock trading 9.9% above the 100-day moving average price of $94.90, indicating an upward trend in the stock. However, CE’s 14-day RSI (relative strength index) of 71 indicates that the stock has moved into a temporary overbought position and that investors might need to watch for possible selling pressure.

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