The chemical industry is one of the United States’ largest manufacturing industries, serving a sizable domestic market and an expanding global market. Despite concerns related to the worldwide supply chain and high input costs, the recovery of the chemical industry has been driven primarily by strong demand for both commodity and specialty chemicals.
The demand for chemicals is expected to increase with the reopening of the economy and rebounding industries, such as automotive and construction. Furthermore, rapid business transformation through advanced technologies is expected to further boost the chemical industry’s growth in the coming years. According to a Verified Market Research report, the global specialty chemicals market is expected to grow at a 6.2% CAGR through 2028.
Because the chemical industry’s prospects look promising, we think it could be wise to bet on Celanese Corporation (CE) and Univar Solutions Inc. (UNVR). These companies have the fundamental wherewithal to capitalize on the industry tailwinds.
Celanese Corporation (CE)
CE is an Irving, Tex.-based technology and specialty materials company that manufactures and sells high-performance engineered polymers internationally. The company operates through Engineered Materials, Acetate Tow, and Acetyl Chain segments.
On Dec. 1, 2021, CE announced that it had completed the acquisition of the Santoprene TPV elastomers business of Exxon Mobil Corporation (XOM). Lori Ryerkerk, chairman and CEO, said, “They have built an industry-renowned brand and product portfolio in the Santoprene™ business that will immediately strengthen the unrivaled portfolio of engineered solutions we bring to our customers.”
CE’s net sales increased 60.6% year-over-year to $2.27 billion for its fiscal first quarter, ended Sept. 30, 2021. The company’s operating profit grew 191.3% year-over-year to $536 million, while its net earnings were $507 million, representing a 142.6% year-over-year increase. Also, its EPS was $4.56, up 160.6% year-over-year.
For the quarter ending March 31, 2022, analysts expect CE’s EPS and revenue to increase 21.1% and 18.5% year-over-year to $4.19 and $2.13 billion, respectively. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 26.7% in price over the past year to close yesterday’s trading session at $173.36.
CE’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a B grade for Momentum, Sentiment, and Quality. Within the A-rated Chemicals industry, CE is ranked #37 of 89 stocks. To see the additional POWR Ratings for CE (Growth, Value, and Stability), click here.
Univar Solutions Inc. (UNVR)
UNVR distributes commodity and specialty chemical products and related services worldwide. It also provides epoxy resins, polyurethanes, titanium dioxide, and fumed silica. The Downers Grove, Ill.-based company distributes its products through a warehouse and direct-to-consumer delivery channels.
On Dec.21, 2021, UNVR announced that it has expanded its Ingredients & Specialties portfolio through a new exclusive distribution agreement with Kalsec Inc. “Adding these innovative, complementary ingredients to our portfolio, along with our best-in-class service, dedicated food and nutraceutical industry expertise, technical support and innovative application kitchens, we can help our customers bring their product vision to life.”
UNVR’s net sales increased 22.8% year-over-year to $2.49 billion for its fiscal third quarter, ended Sept. 30, 2021. The company’s adjusted EBITDA grew 27.2% year-over-year to $210.90 million, while its adjusted net income came in at $106.30 million, representing a 104% year-over-year increase. And its adjusted EPS was $0.62, up 106.7% year-over-year.
Analysts expect UNVR’s EPS and revenue to increase 16.3% and 8.8%, respectively, year-over-year to $0.50 and $2.34 billion for the quarter ending March 31, 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 36% in price to close yesterday’s trading session at $28.17.
It is no surprise that UNVR has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Growth and a B grade for Momentum and Sentiment. Click here to see UNVR’s rating for Stability, Value, and Quality as well. UNVR is ranked #16 in the A-rated Chemicals industry.
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CE shares were trading at $173.53 per share on Friday afternoon, up $0.17 (+0.10%). Year-to-date, CE has gained 3.25%, versus a -2.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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