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Westlake Corporation (WLK)
:WLK

Westlake Corporation (WLK) AI Stock Analysis

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Westlake Corporation

(NYSE:WLK)

Rating:60Neutral
Price Target:
$80.00
â–²(5.12%Upside)
Westlake Chemical's overall score reflects financial challenges with declining revenues and profit margins. Technical indicators show bearish momentum, and the stock appears overvalued based on the P/E ratio. While cost-reduction initiatives are promising, substantial hurdles remain, particularly in the PEM segment.
Positive Factors
Cost Savings
Management expects to recover the €190mm costs over the next 2-3 years as they saved on fixed costs, maintenance, etc.
Strong Balance Sheet
Analyst reiterates a Buy recommendation based on Westlake's strong balance sheet, which should allow it to capitalize on opportunities.
Negative Factors
Facility Closure Impact
Westlake is incurring a €190M charge to cease all operations at its Pernis, the Netherlands facility.
Pricing and Demand Challenges
PVC and PE pricing fell with potential for further declines, leading to reduced earnings estimates.

Westlake Corporation (WLK) vs. SPDR S&P 500 ETF (SPY)

Westlake Corporation Business Overview & Revenue Model

Company DescriptionWestlake Corporation manufactures and supplies petrochemicals, polymers, and building products worldwide. It operates through two segments, Performance and Essential Materials; and Housing and Infrastructure Products. The Performance and Essential Materials segment manufactures and markets polyethylene, styrene monomer, ethylene co-products, PVC, VCM, ethylene dichloride chlor-alkali, and chlorinated derivative products. The Housing and Infrastructure Products segment manufactures and sells residential PVC siding; PVC trim and moldings; roofing applications; decorative stone; windows; PVC decking; PVC films for various inflatables, wallcovering, tape, and roofing applications; polymer composite roof tiles; PVC pipe and fittings; PVC compounds; and various consumer and commercial products such as landscape edging; industrial, home and office matting; marine dock edging; and masonry joint controls. The company offers its products to a range of customers, including chemical processors, plastics fabricators, small construction contractors, municipalities, and supply warehouses for use in various consumer and industrial markets, including residential construction, flexible and rigid packaging, automotive products, healthcare products, water treatment, and coatings, as well as other durable and non-durable goods. The company was formerly known as Westlake Chemical Corporation and changed its name to Westlake Corporation in February 2022. The company was founded in 1986 and is headquartered in Houston, Texas. Westlake Corporation is a subsidiary of TTWF LP.
How the Company Makes MoneyWestlake Corporation generates revenue primarily through the sale of petrochemical and polymer products. The Olefins segment contributes to revenue by producing and selling ethylene and polyethylene, which are key components used in various consumer and industrial products. The Vinyls segment generates earnings through the production and sale of PVC and VCM, which are used extensively in construction and infrastructure projects. The company benefits from strategic partnerships and long-term contracts with key industrial players, optimizing its supply chain and ensuring a stable demand for its products. Additionally, Westlake's global footprint allows it to tap into diverse markets, further enhancing its revenue streams.

Westlake Corporation Earnings Call Summary

Earnings Call Date:May 02, 2025
(Q1-2025)
|
% Change Since: -16.98%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with the HIP segment showing stable performance and operational improvements, while the PEM segment faced significant challenges due to increased costs and lower demand. The company's strategic focus on cost reductions and operational reliability is promising, but the current economic and market conditions present substantial hurdles.
Q1-2025 Updates
Positive Updates
Strong Performance in HIP Segment
The Housing and Infrastructure Products (HIP) segment achieved a solid 20% EBITDA margin despite challenges from winter storms and higher mortgage interest rates.
Cost Reduction Initiatives
Westlake increased its cost reduction target for 2025 by $25 million, achieving $40 million in cost reductions in Q1, with a new range of $150 million to $175 million for the year.
Successful Plant Turnarounds
Completed turnarounds at Petro 1 ethylene plant and Geismar plant, enhancing operational reliability and future production capabilities.
Strong Cash Position
Westlake reported $2.5 billion in cash and investments, with a focus on strategic deployment for long-term value creation.
Negative Updates
PEM Segment Underperformance
Performance and Essential Materials (PEM) segment experienced significant headwinds, with $180 million lower EBITDA compared to Q1 2024 due to higher feedstock and energy costs and operational outages.
Net Loss for the Quarter
Westlake reported a net loss of $40 million, primarily attributed to increased costs and a decrease in sales volume and prices.
Increased Feedstock and Energy Costs
Higher North American feedstock and energy costs increased expenses by approximately $100 million year-over-year.
Challenging Global Demand
Global demand remained well below historical levels, with disruptions from tariffs impacting growth and sales volumes.
Company Guidance
In the first quarter of 2025, Westlake Corporation reported an EBITDA of $288 million on net sales of $2.8 billion. The Housing and Infrastructure Products (HIP) segment maintained a solid 20% EBITDA margin despite challenges from winter storms and rising mortgage interest rates, which slowed home construction and product sales. The Performance and Essential Materials (PEM) segment faced a $100 million increase in costs due to higher feedstock and energy prices, alongside $80 million in financial impacts from planned turnarounds and unexpected outages. Consequently, PEM's EBITDA was $180 million lower than in the first quarter of 2024. Westlake is implementing cost-reduction measures, targeting $150-$175 million in savings for 2025, with $40 million already achieved in Q1. Capital spending is also being reduced by 10% to $900 million. The company expects HIP's 2025 revenue and EBITDA margin to be at the lower end of the $4.4-$4.6 billion and 20%-22% ranges, respectively, due to macroeconomic uncertainties and shifts in sales mix.

Westlake Corporation Financial Statement Overview

Summary
Westlake Chemical's financial results display a mix of strengths and challenges. While the company maintains a robust balance sheet with low leverage and substantial equity, its income statement reflects margin pressures and revenue declines. Cash flow management poses potential risks, as evidenced by the notable drop in free cash flow. Strategic focus on operational efficiency and cash flow stabilization could enhance financial resilience moving forward.
Income Statement
65
Positive
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.
Balance Sheet
70
Positive
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.
Cash Flow
60
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue12.01B12.14B12.55B15.79B11.78B7.50B
Gross Profit1.69B1.96B2.22B4.07B3.50B1.02B
EBITDA1.90B2.21B1.96B4.18B3.69B1.25B
Net Income388.00M602.00M479.00M2.25B2.02B330.00M
Balance Sheet
Total Assets20.55B20.75B21.04B20.55B18.46B13.84B
Cash, Cash Equivalents and Short-Term Investments2.23B2.92B3.30B2.23B1.91B1.31B
Total Debt4.88B5.28B5.52B4.88B5.18B3.57B
Total Liabilities10.09B9.71B10.27B10.09B9.93B7.26B
Stockholders Equity9.93B10.53B10.24B9.93B7.96B6.04B
Cash Flow
Free Cash Flow84.00M306.00M1.30B2.29B1.74B772.00M
Operating Cash Flow1.07B1.31B2.34B3.40B2.39B1.30B
Investing Cash Flow-1.16B-1.00B-1.04B-2.48B-3.21B-509.00M
Financing Cash Flow-691.00M-650.00M-245.00M-587.00M1.44B-216.00M

Westlake Corporation Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price76.10
Price Trends
50DMA
79.86
Negative
100DMA
92.02
Negative
200DMA
109.75
Negative
Market Momentum
MACD
-1.18
Negative
RSI
49.72
Neutral
STOCH
54.66
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 76.1 is above the 20-day moving average (MA) of 74.33, below the 50-day MA of 79.86, and below the 200-day MA of 109.75, indicating a neutral trend. The MACD of -1.18 indicates Negative momentum. The RSI at 49.72 is Neutral, neither overbought nor oversold. The STOCH value of 54.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WLK.

Westlake Corporation Risk Analysis

Westlake Corporation disclosed 33 risk factors in its most recent earnings report. Westlake Corporation 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 Corporation Peers Comparison

Overall Rating
UnderperformOutperform
Sector (43)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$3.00B31.404.32%3.29%3.58%-5.17%
EMEMN
68
Neutral
$8.79B9.6616.16%4.38%2.78%1.50%
LYLYB
67
Neutral
$18.47B17.787.19%9.53%-6.53%-50.08%
SQSQM
67
Neutral
$9.58B16.7112.17%0.47%-28.74%53.25%
RPRPM
64
Neutral
$14.00B22.0725.53%1.87%-0.61%15.06%
WLWLK
60
Neutral
$9.61B25.193.71%2.80%-1.27%48.34%
43
Neutral
AU$1.35B-6.12-40.62%4.33%-4.78%-43.21%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WLK
Westlake Corporation
76.10
-66.00
-46.45%
EMN
Eastman Chemical
76.15
-18.34
-19.41%
LYB
LyondellBasell
58.40
-30.62
-34.40%
AVNT
Avient
33.05
-9.49
-22.31%
RPM
RPM International
109.43
3.55
3.35%
SQM
Sociedad Quimica Y Minera SA
35.25
-5.50
-13.50%

Westlake Corporation Corporate Events

Business Operations and Strategy
Westlake Corporation to Close Pernis Facility in Netherlands
Negative
Jun 17, 2025

Westlake Corporation announced plans to cease operations at its Pernis facility in the Netherlands due to continued business deterioration in Europe. The closure, which follows consultations with local councils and unions, will result in a workforce reduction of approximately 230 employees and incur pre-tax costs of about EUR 190 million. The company will continue to supply customers from its Deer Park, Texas facility.

The most recent analyst rating on (WLK) stock is a Hold with a $110.00 price target. To see the full list of analyst forecasts on Westlake Corporation stock, see the WLK Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Westlake Chemical Approves Board Members and Auditor
Neutral
May 12, 2025

At the 2025 Annual Meeting held on May 8, 2025, Westlake Corporation’s stockholders voted on two key matters. The election of four board members and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, were both approved, indicating continued stability and oversight in the company’s governance and financial auditing processes.

The most recent analyst rating on (WLK) stock is a Hold with a $110.00 price target. To see the full list of analyst forecasts on Westlake Chemical stock, see the WLK Stock Forecast page.

Financial Disclosures
Westlake Chemical Reports Q1 2025 Financial Losses
Negative
May 2, 2025

Westlake Corporation, a major player in the chemical industry, reported its financial results for the first quarter of 2025, revealing a challenging period with a net loss of $40 million and a decrease in EBITDA margin to 10%. The company’s Housing and Infrastructure Products segment showed resilience with a 20% EBITDA margin, while the Performance and Essential Materials segment faced difficulties, contributing to the overall operational loss.

Executive/Board Changes
Westlake Chemical Awards RSUs to Executive VP
Neutral
Apr 16, 2025

On April 11, 2025, Westlake Corporation’s Board of Directors approved a special award of restricted stock units (RSUs) valued at $1,500,000 for Robert F. Buesinger, Executive Vice President of the Performance and Essential Materials Segment. The RSUs will fully vest on December 31, 2026, contingent upon Mr. Buesinger’s continued full-time employment with the company, highlighting the company’s commitment to retaining key leadership and potentially impacting its strategic direction.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 17, 2025