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Westlake Chemical Corp (WLK)
NYSE:WLK
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Westlake Chemical
(NYSE:WLK)59Neutral
Positive Factors
Financial Performance
WLK offers an attractive risk/reward for longer-term investors looking to 2026/27.
Management and Strategy
WLK is a U.S.-focused chlor-alkali, PVC, building products, and PE producer with top-notch management and an impeccable balance sheet.
Negative Factors
Earnings Outlook
Earnings per share estimates for future years have been revised downward.
Earnings Performance
WLK's 4Q results missed earnings driven primarily by its commodity-exposed PEM segment.
Market Conditions
Commodity fundamentals generally remain weak in the near-medium term with rising pressure from higher raws.
Westlake Chemical (WLK) vs. S&P 500 (SPY)
Market Cap
$14.23B
Dividend Yield1.85%
Average Volume (3M)660.86K
Price to Earnings (P/E)23.9
Beta (1Y)1.16
Revenue Growth-3.24%
EPS Growth24.29%
CountryUS
Employees15,520
SectorBasic Materials
Sector Strength56
IndustryChemicals
Share Statistics
EPS (TTM)4.63
Shares Outstanding128,229,500
10 Day Avg. Volume761,498
30 Day Avg. Volume660,858
Financial Highlights & Ratios
PEG Ratio0.98
Price to Book (P/B)N/A
Price to Sales (P/S)1.17
Price to Cash Flow (P/CF)8.20
P/FCF Ratio8.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$138.36Price Target Upside23.67% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
Westlake Chemical Business Overview & Revenue Model
Company DescriptionWestlake Chemical Corporation (WLK) is a global manufacturer and supplier of petrochemicals, polymers, and building products. The company operates in two primary segments: Olefins and Vinyls. Its core products include polyethylene, styrene, and vinyls, which are utilized in a broad range of consumer and industrial applications such as packaging, automotive products, construction materials, and coatings. Westlake Chemical is known for its vertically integrated operations, which enhance its ability to deliver high-quality products efficiently to its diverse customer base worldwide.
How the Company Makes MoneyWestlake Chemical makes money through the production and sale of its petrochemical, polymer, and building products. The company generates revenue primarily from its Olefins and Vinyls segments. In the Olefins segment, revenue is derived from the sale of products like polyethylene and styrene, which are used in various consumer goods and industrial applications. In the Vinyls segment, the company earns income from products such as PVC and other vinyl resins, which are integral to the construction and infrastructure sectors. Westlake Chemical's vertically integrated operations allow it to optimize production costs and maintain competitive pricing, further enhancing profitability. Additionally, strategic acquisitions and partnerships contribute to revenue growth and market expansion, enabling the company to strengthen its position in the global market.
Westlake Chemical Financial Statement Overview
Summary
Westlake Chemical's financial performance is mixed. The balance sheet is strong with a low debt-to-equity ratio and substantial equity, but the income statement reveals declining revenue and margin pressures. The significant drop in free cash flow highlights potential cash management issues.Income Statement
Westlake Chemical has shown a fluctuating revenue trajectory with a recent decline from $12.548 billion in 2023 to $12.142 billion in 2024. The gross profit margin in 2024 stands at 16.11%, with a net profit margin of 4.96%. Notably, there was a significant dip in EBIT and EBITDA margins, reflecting increased operational challenges. However, the company demonstrated resilience in maintaining profitability amidst a challenging environment.65
Positive
Balance Sheet
The balance sheet reveals a solid equity base with stockholders' equity at $10.527 billion in 2024, translating to an equity ratio of 50.73%. The debt-to-equity ratio is low at 0.068, indicating conservative leverage use. The company has considerable cash reserves, enhancing financial stability and providing flexibility for future investments.70
Positive
Cash Flow
Free cash flow has decreased significantly from $1.302 billion in 2023 to $306 million in 2024, representing a substantial contraction in liquidity. The operating cash flow to net income ratio is strong at 2.18, highlighting effective cash generation relative to net income. However, the decline in free cash flow growth underscores potential cash management pressures.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 12.14B | 12.55B | 15.79B | 11.78B | 7.50B | Gross Profit |
| 1.96B | 2.22B | 4.07B | 3.50B | 1.02B | EBIT |
| 875.00M | 729.00M | 3.05B | 2.80B | 429.00M | EBITDA |
| 2.21B | 1.96B | 4.18B | 3.69B | 1.25B | Net Income Common Stockholders |
| 602.00M | 479.00M | 2.25B | 2.02B | 330.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.92B | 3.30B | 2.23B | 1.91B | 1.31B | Total Assets |
| 20.75B | 21.04B | 20.55B | 18.46B | 13.84B | Total Debt |
| 719.00M | 5.52B | 4.88B | 5.18B | 3.57B | Net Debt |
| -2.20B | 2.21B | 2.65B | 3.27B | 2.25B | Total Liabilities |
| 9.71B | 10.27B | 10.09B | 9.93B | 7.26B | Stockholders Equity |
| 10.53B | 10.24B | 9.93B | 7.96B | 6.04B |
| Cash Flow | Free Cash Flow | |||
| 306.00M | 1.30B | 2.29B | 1.74B | 772.00M | Operating Cash Flow |
| 1.31B | 2.34B | 3.40B | 2.39B | 1.30B | Investing Cash Flow |
| -1.00B | -1.04B | -2.48B | -3.21B | -509.00M | Financing Cash Flow |
| -650.00M | -245.00M | -587.00M | 1.44B | -216.00M |
Westlake Chemical Technical Analysis
Neutral
111.88
Price Trends
112.86
Negative
120.69
Negative
132.88
Negative
Market Momentum
-0.97
Negative
50.26
Neutral
64.32
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WLK, the sentiment is Neutral. The current price of 111.88 is above the 20-day moving average (MA) of 111.15, below the 50-day MA of 112.86, and below the 200-day MA of 132.88, indicating a neutral trend. The MACD of -0.97 indicates Negative momentum. The RSI at 50.26 is Neutral, neither overbought nor oversold. The STOCH value of 64.32 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WLK.
Westlake Chemical Risk Analysis
Westlake Chemical disclosed 31 risk factors in its most recent earnings report. Westlake Chemical reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Westlake Chemical Peers Comparison
Overall Rating
UnderperformOutperform
Sector (47)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $11.16B | 12.63 | 16.11% | 3.36% | 1.91% | 2.94% | |
65 Neutral | $26.18B | 19.34 | 19.13% | 2.33% | -4.59% | 11.09% | |
59 Neutral | $14.23B | 23.92 | 5.76% | 1.85% | -3.24% | 24.29% | |
59 Neutral | $24.55B | 18.28 | 10.69% | 6.94% | -1.46% | -36.00% | |
58 Neutral | $26.59B | 24.13 | 6.14% | 7.48% | -3.72% | 91.57% | |
47 Neutral | $2.64B | -4.00 | -31.55% | 3.33% | 2.93% | -29.90% | |
42 Neutral | $8.99B | ― | -12.18% | 2.10% | -44.08% | -183.44% |
* Basic Materials Sector Average
Performance Comparison
WLK
Westlake Chemical
111.88
-27.73
-19.86%
ALB
Albemarle
75.51
-47.33
-38.53%
EMN
Eastman Chemical
98.79
10.12
11.41%
LYB
LyondellBasell
77.50
-18.87
-19.58%
PPG
PPG Industries
115.48
-23.95
-17.18%
DOW
Dow Inc
37.45
-16.66
-30.79%
Westlake Chemical Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: 2.47% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
Westlake Corporation showed significant strength in its HIP segment with record-breaking results and strong cost management. However, the PEM segment faced challenges with price declines and impairments. Despite these issues, strong cash reserves and shareholder returns paint a balanced picture.Highlights
Record Performance in Housing and Infrastructure Products (HIP) Segment
HIP segment achieved record income from operations of $807 million and a record EBITDA margin of 24% in 2024, driven by strong 8% sales volume growth. HIP contributed 85% of total segment operating income for the year.
Significant Cost Savings Achieved
Westlake exceeded its cost-saving target, achieving $170 million in total cost reductions for 2024, surpassing their initial goal of $125 million to $150 million.
Strong Cash Position
Westlake finished the year with $2.9 billion in cash and cash equivalents, providing flexibility to pursue growth opportunities.
Successful Shareholder Returns
Approximately $325 million was returned to shareholders through dividends and share repurchases, demonstrating a commitment to rewarding shareholders.
New Manufacturing Plant Construction
The construction of a new PVCO manufacturing plant in Wichita Falls, Texas, is underway to meet strong customer demand.
Lowlights
Mothballing and Impairment Charges
Westlake accrued $75 million of expenses related to mothballing two units in Europe and recorded a $475 million non-cash impairment charge related to the company's Epoxy business.
Decline in Sales and Prices
Full-year 2024 sales declined by 3% compared to 2023, with a 10% decrease in average sales prices, particularly affecting core vinyls and epoxy resin.
Challenges in PEM Segment
PEM segment faced pressures with a 12% decline in prices and flat to down volumes, with particular challenges in the core vinyls chain.
Louisiana Tax Legislation Impact
A non-cash charge of approximately $45 million was recorded for the revaluation of state deferred tax assets and liabilities due to legislative changes in Louisiana.
Company Guidance
In the Westlake Corporation fourth quarter and full year 2024 earnings conference call, management reported a robust performance with significant year-over-year growth. The company achieved sales of $2.8 billion in the fourth quarter, marking a 7% increase from the prior year, with EBITDA reaching $416 million, up from $390 million. The Housing and Infrastructure Products (HIP) segment experienced a strong 7% sales volume growth, driven by high demand for pipe, fittings, siding, and trim, contributing to a record operating income of $807 million and an EBITDA margin of 24% for the year. Performance and Essential Materials (PEM) also saw a 1% volume growth, despite facing pricing pressures due to industry capacity increases. The company realized total cost savings of $170 million in 2024, exceeding its target, while also returning $325 million to shareholders. Looking ahead, Westlake provided guidance for 2025, projecting HIP revenue between $4.4 billion and $4.6 billion with an EBITDA margin of 20% to 22%. The company emphasized its strong balance sheet, ending the year with $2.9 billion in cash and cash equivalents, positioning it well for future growth initiatives.Westlake Chemical Corporate Events
Executive/Board Changes
Westlake Chemical Awards CEO $1M in RSUs
Neutral
Mar 4, 2025
On February 28, 2025, Westlake Corporation’s Compensation Committee approved a special award of restricted stock units (RSUs) to Jean-Marc Gilson, the company’s President and CEO, valued at $1,000,000 under their 2013 Omnibus Incentive Plan. The RSUs will fully vest on February 28, 2028, contingent upon Mr. Gilson’s continuous full-time employment with the company, reflecting a strategic move to retain key leadership.
Financial Disclosures
Westlake Chemical Reports Record 2024 Financial Results
Positive
Feb 24, 2025
Westlake Corporation announced its financial results for the fourth quarter and full year of 2024, reporting record income from operations of $807 million and EBITDA of $1.1 billion in its Housing and Infrastructure Products segment. This marks the fifth consecutive quarter of year-over-year growth in sales volume, underscoring the company’s robust market positioning and operational resilience.
Executive/Board Changes
Westlake Chemical Appoints Roger A. Cregg to Board
Neutral
Dec 11, 2024
Westlake Corporation announced the appointment of Roger A. Cregg to its board of directors, succeeding Marius A. Haas, who retired. Cregg brings extensive experience from his previous executive roles in major companies and is expected to contribute significantly to Westlake’s strategic direction, given his background in the homebuilding industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.