A week ago, Celanese Corporation (NYSE:CE) came out with a strong set of yearly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.6% to hit US$5.7b. Celanese also reported a statutory profit of US$16.75, which was an impressive 170% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Celanese's 16 analysts is for revenues of US$6.00b in 2021, which would reflect a reasonable 6.1% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 45% to US$9.37 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.00b and earnings per share (EPS) of US$9.37 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$140, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Celanese analyst has a price target of US$160 per share, while the most pessimistic values it at US$107. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Celanese's rate of growth is expected to accelerate meaningfully, with the forecast 6.1% revenue growth noticeably faster than its historical growth of 2.2%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.5% next year. Celanese is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$140, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Celanese going out to 2025, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 3 warning signs for Celanese you should be aware of, and 1 of them doesn't sit too well with us.
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