X
<

An Investor’s Guide to Celanese’s Leverage

PART:
1 2 3 4 5
Part 4
An Investor’s Guide to Celanese’s Leverage PART 4 OF 5

Why Celanese Trades at Premium Compared to Its Peers

Celanese’s forward PE ratio

On September 27, Celanese (CE) had a one-year forward price-to-earnings (or PE) multiple of ~13.3x compared to its peer Eastman Chemical (EMN). EMN had one-year forward price-to-earnings multiple of ~11.0x. Forward PE is one of the valuation methods that consider future earnings at the time of the valuation.

Why Celanese Trades at Premium Compared to Its Peers

Interested in WLK? Don't miss the next report.

Receive e-mail alerts for new research on WLK

Success! You are now receiving e-mail alerts for new research. A temporary password for your new Market Realist account has been sent to your e-mail address.

Success! has been added to your Ticker Alerts.

Success! has been added to your Ticker Alerts. Subscriptions can be managed in your user profile.

Forward PE can be useful for investors when assessing two companies that are operating in the same industry. Forward PE helps investors determine whether a company is undervalued or overvalued.

Celanese trades at a premium

Celanese (CE) trades at a premium compared to Eastman Chemical. CE reported earnings that exceeded analyst expectations. CE also made an upward revision to the lower end of its adjusted EPS (earnings per share).

As a result, analysts expect Celanese to post adjusted EPS of $7.33, an increase of 10.8% over the previous year. For fiscal 2018, analysts project Celanese’s adjusted EPS to be $8.10, implying growth of 10.6% over the expected adjusted EPS in fiscal 2017.

On the other hand, analysts expect EMN’s 2018 adjusted EPS to be $8.17, reflecting growth of 8.6% over its expected adjusted EPS in 2017. Because CE’s one-year forward expected earnings growth is better than Eastern Chemical’s forward expected earnings growth, CE is trading at a premium to EMN.

Investors can indirectly hold Celanese by investing in the First Trust Materials AlphaDEX ETF (FXZ), which invests 1.9% of its portfolio in Celanese. The other holdings of the fund include Westlake Chemical (WLK) and Owens Corning (OC), with weights of 4.0% and 3.7%, respectively, on September 27, 2017.

X

Please select a profession that best describes you: