A Look at Celanese (CE) Valuation Following Stronger-Than-Expected Q2 Earnings and Upbeat Guidance

Celanese (NYSE:CE) is back on investors’ radar after its second quarter results came in stronger than anticipated, even as sales and volumes dropped off. The market’s attention was caught by Celanese’s ability to beat earnings and sales estimates amid an environment of weak demand and falling prices. Not only did the company outperform, but management kept guidance steady for free cash flow and earnings per share, signaling confidence despite acknowledging ongoing challenges in their end markets. Since releasing those earnings, Celanese shares have bounced up roughly 8 percent, outpacing the S&P 500 in the same period. It has been a refreshing change of pace for a stock that, over the past year, has delivered a loss of over 62 percent. Other recent developments include Celanese’s upcoming presentation at the Morgan Stanley Annual Laguna Conference, which could offer further insights on the company’s strategy and market outlook. Overall, short-term momentum has recently turned positive after a long period of underperformance. After this move higher, the question remains: is Celanese undervalued and presenting a buying opportunity, or is the market already pricing in any rebound in earnings and cash flow?

Most Popular Narrative: 16.6% Undervalued

Celanese is currently viewed as undervalued by the most popular narrative, suggesting the stock has significant upside potential relative to its fair value estimate.

Celanese's investments in green chemistry and downstream product diversification position it to capture share as demand accelerates for sustainable materials. This trend is driven by both tightening environmental regulation and increased consumer focus on circular solutions, which supports long-term top-line and margin expansion.

Curious why analysts are so bullish? The foundation of this narrative is a set of aggressive growth and profitability assumptions that you might not expect from a legacy chemicals company. Wondering which surprising levers could drive Celanese's comeback? The underlying math points to a future valuation more often seen in faster-growing industries.

Result: Fair Value of $54.69 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, prolonged weak demand or persistent overcapacity in Celanese’s core markets could undermine the optimistic outlook and delay any sustained earnings recovery.

Find out about the key risks to this Celanese narrative.

Another View: Sizing Up a Different Valuation Model

A separate take comes from our DCF model, which also sees Celanese as undervalued. This method weighs the company’s future cash flows rather than recent earnings or sales multiples. Will both models prove right, or could the market have missed something?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Celanese for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Celanese Narrative

If you see things differently or want to dig deeper into the numbers, you can craft a personalized Celanese story in just a few minutes. Do it your way.

A great starting point for your Celanese research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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