By Rob Otman
Celanese (NYSE: CE) is a large cap company that operates within the chemicals industry. Its market cap is $14 billion today and the total one-year return is 13.81% for shareholders.
Celanese stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Celanese reported a recent EPS growth rate of 32.74%. That’s below the chemicals industry average of 65.32%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the chemicals industry is 26.60. And Celanese’s ratio comes in at 15.56. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Celanese stock is 110.37%. That’s above the chemicals industry average of 71.82%. That’s not a good sign.
✗ Free Cash Flow per Share Growth: Celanese has decreased its FCF per share over the last year relative to its competitors. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✓ Profit Margins: The profit margin of Celanese comes in at 12.74% today. And generally, the higher, the better. We also like to see this ratio above competitors. Celanese’s profit margin is above the chemicals average of 12.12%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Celanese is 30.79% and that’s above its industry average ROE of 22.99%.
Celanese stock passes three of our six key metrics today. That’s why our Investment U Stock Grader gives it a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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