Hassan Ahmed, Founder and Head of Research of Alembic Global Advisors, says he believes Celanese Corporation’s (CE) margins have been unnaturally high and aren’t sustainable. He says the stock may be overvalued.
“It’s an extremely well-running company, but they had a large earnings beat in 1Q and, on the back of that, the stock rallied very high,” he says. “I think there is an expectation in the market that the strength that was exhibited in 1Q may actually carry on over the next couple of quarters, and I do not believe that may happen.”
FOR MORE INFORMATION ON THIS INTERVIEW CLICK HERE.
Ahmed says that the first quarter was a bit of an anomaly for Celanese because crude oil prices fell drastically. As a result, the company’s raw material price fell significantly, but their product prices remained in the same range.
“They will eventually move with a slight lag. So because of that lag effect, margins for the company were unnaturally high, which in my mind is not sustainable,” he says. “Keep in mind that the asset yields chain, the main chain of products that they produce, is extremely oversupplied right now.”
Hittite Microwave Corp (HITT) Sells to Higher Growth Verticals; Has High Margins
June 04, 2013
Easing in Commodity Inflation to Bolster Restaurant Margins
March 26, 2012
Water Services Offers Improved Margins in Slow-Growth Environment
August 27, 2012
Werner Enterprises (WERN) and Celadon Group (CGI) Improve Margins to Grow Faster than Peers
September 24, 2012
Niche Carriers Southwest Airlines (LUV), Alaska Air Group (ALK) and JetBlue Airways (JBLU) See Better Margins and Room for Expan
November 28, 2012
