Can Strong Q4 Earnings Give Celanese Stock a Needed Boost?

The shares of Celanese Corporation (NYSE:CE) are up 0.8% at $161.16 at last check, as the company gears up for its fourth-quarter earnings report, which is due out after the close tomorrow, Jan. 27. The security is bouncing off the $154 level ahead of the event, after experiencing a steep pullback from its Jan. 5, all-time high of $176.46. Year-over-year, CE still sports a 28% lead.

Analysts are optimistic towards Celanese stock, with nine of the 14 in question sporting a "buy" or better rating, while five said "hold." Plus, the 12-month consensus target price of $195.59 is a 21.8% premium to current levels.

The security has a history of upbeat post-earnings reactions, finishing five of eight next-day sessions higher over the last two years, including a 4.2% pop in July 2020. Options traders are pricing in a 7% swing for CE this time around, which is more than double the 2.6% move it averaged following its last eight reports, regardless of direction.

Celanese stock doe not provide the greatest fundamentals, however, with an inconsistent growth rate, and a relatively low level of security. CE's balance sheet includes $3.96 billion in total debt, and just $1.33 billion in cash. Between 2018 and 2020, annual revenues declined 21%, while net income dropped 30% from 2018 to 2019.

Nonetheless, the chemical producer’s overall growth trajectory has been positive, with CE growing its revenues and net income 10% and 134%, respectively, since 2018. The equity also boasts a decent valuation, trading at great price-earnings ratio of 6.46, but a relatively high price-sales ratio of 2.33. 

Furthermore, Celanese stock offers a forward dividend of $2.72, with a dividend yield of 1.7%. Still, Celanese stock does not provide enough growth potential or stability as a long-term or short-term investment, for the amount of faults in the company’s overall fundamentals.