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Why Analysts Think Celanese Will Post Higher Revenues in 3Q17

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Celanese’s revenue expectations for 3Q17

As of October 9, 2017, analysts are expecting Celanese (CE) to report revenue of $1.5 billion during its upcoming 3Q17 earnings, which implies growth of approximately 12.9% compared to 3Q16. In fiscal 3Q16, Celanese reported revenue of $1.3 billion.

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What could drive CE’s revenue up in 3Q17?

CE’s expected revenue growth in 3Q17 will be majorly driven by acquisitions. On December 1, 2016, CE completed the acquisition of Italian-based SO.F.TER. Group, which included the product portfolio of engineering thermoplastics and thermoplastic elastomers. CE also acquired NILIT’s Nylon Compounding division. The acquisition was completed during 2Q17. These two acquisitions have enhanced CE’s Advanced Engineered Materials division. The acquisitions have also strengthened CE’s global presence. The company will also likely benefit from the IBN Sina joint venture to produce 50,000 metric tons of polyacetal. The company expected to begin production in 3Q17.

Further, Celanese has increased prices of several products in the past three months. If the volumes don’t drop, CE’s top line will benefit from the price rise. However, CE volumes in the Gulf Coast might be adversely impacted by Hurricane Harvey. During this time, vinyl acetate monomer delivery was disrupted, which could have resulted in volume declines in the Acetyl Intermediate segment.

Investors can indirectly hold Celanese by investing in the Guru Index ETF (GURU), which has invested 2.8% of its holdings in Celanese. The other top holdings of the fund include Netflix (NFLX), Broadcom (AVGO), and Darling Ingredients (DAR), which have weights of 3.1%, 2.9%, and 3.3%, respectively, as of October 9, 2017.

In the next part, we’ll look into analysts’ expectations on CE’s adjusted earnings per share for 3Q17.

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