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Westlake Chemical Partners LP (WLKP)
NYSE:WLKP
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Westlake Chemical PRN
(NYSE:WLKP)
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Rating:67Neutral
Price Target:
$23.50
▲(23.29% Upside)
Westlake Chemical PRN's strong valuation and solid financial performance are offset by bearish technical indicators and operational pressures highlighted in the earnings call. The high dividend yield is a significant positive, but the stock's current bearish trend and global economic challenges present risks.
Positive Factors
Renewed Ethylene Sales Agreement
A renewed Ethylene Sales Agreement through 2027 locks in pricing formula and volume protections, preserving predictable, fee-based cash flows. This structural contract lowers commodity exposure for the Partnership and supports long-term distributable cash flow visibility for investors.
Consistent Distributions
A 45-quarter consecutive distribution record demonstrates durable cash allocation discipline and a business model designed to generate steady payouts. Consistent distributions signal reliable underlying cash generation and management focus on returning cash to unitholders over the medium term.
Balanced leverage and strong ROE
Conservative leverage (~1x consolidated, D/E ~0.79) combined with a robust 23.7% ROE indicates efficient capital deployment and financial flexibility. This balance supports funding for maintenance, potential OpCo ownership increases, and stable distributions without excessive solvency risk.
Negative Factors
Inconsistent revenue growth
Revenue growth has been uneven, with a modest 2.9% TTM increase following earlier declines. Structural inconsistency reduces predictability of cash flows and makes long-term planning harder, potentially limiting capital allocation for expansions or deleveraging if weak trends persist.
Declining free cash flow
A 14.3% TTM decline in free cash flow weakens the Partnership's internal funding capacity for growth, maintenance, and distributions. If this trend continues, it could pressure distributable cash flow coverage and constrain the ability to pursue acquisitions or increase OpCo ownership without raising external capital.
Exposure to ethylene margin and demand cycles
Business fundamentals remain tied to ethylene margins and global industrial demand. Lower ethylene margins and soft industrial activity reduce unit economics and distributable cash flow resilience, creating cyclical earnings volatility that can persist across multiple quarters.
Westlake Chemical PRN (WLKP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$756.38M
Dividend Yield9.9%
Average Volume (3M)48.84K
Price to Earnings (P/E)15.4
Beta (1Y)0.15
Revenue Growth-0.82%
EPS Growth-20.35%
CountryUS
Employees2,169
SectorBasic Materials
Sector Strength58
IndustryChemicals
Share Statistics
EPS (TTM)0.42
Shares Outstanding35,245,880
10 Day Avg. Volume37,539
30 Day Avg. Volume48,839
Financial Highlights & Ratios
PEG Ratio0.87
Price to Book (P/B)1.57
Price to Sales (P/S)0.72
P/FCF Ratio1.87
Enterprise Value/Market Cap1.50
Enterprise Value/Revenue1.00
Enterprise Value/Gross Profit3.24
Enterprise Value/Ebitda2.91
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Westlake Chemical PRN Business Overview & Revenue Model
Company DescriptionWestlake Chemical Partners LP acquires, develops, and operates ethylene production facilities and related assets in the United States. The company's ethylene production facilities primarily convert ethane into ethylene. It also sells ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline, and hydrogen directly to third parties on either a spot or contract basis. Westlake Chemical Partners GP LLC serves as the general partner of the company. The company was incorporated in 2014 and is headquartered in Houston, Texas.
How the Company Makes MoneyWestlake Chemical PRN generates revenue primarily through the production and sale of ethylene and polyethylene products. Its revenue model is based on the volume of products sold, with pricing influenced by market demand and raw material costs. The company also derives income from its ownership interest in Westlake's ethylene production facilities, receiving a portion of the profits generated from these operations. Significant partnerships with distributors and manufacturers in various industries further enhance its revenue streams. Additionally, the company's strategic focus on cost management and operational efficiency contributes to its profitability.
Westlake Chemical PRN Earnings Call Summary
Earnings Call Date:Oct 30, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 24, 2026
Earnings Call Sentiment Neutral
The earnings call reflected a stable business model with strong contractual agreements and a solid financial foundation. However, the lower net income and cash flow due to planned maintenance activities and global economic challenges indicate some current operational pressures.Q3-2025 Updates
Positive Updates
Renewal of Ethylene Sales Agreement
OpCo and Westlake agreed to renew the Ethylene Sales Agreement through the end of 2027 with no changes to the contract terms or conditions, maintaining the same pricing formula and sales volume protections.
Stable Financial Performance
The Partnership's predictable fee-based cash flow continues to prove beneficial, with 45 consecutive quarterly distributions since its IPO in 2014, growing distributions by 71% since the original minimum distribution.
Strong Balance Sheet
Westlake Partners maintains conservative financial and leverage metrics, with a consolidated leverage ratio of approximately 1x and a stable cash position of $51 million.
Negative Updates
Decrease in Net Income and Distributable Cash Flow
Third quarter 2025 net income of $15 million was lower than the third quarter 2024 due to lower margins on ethylene sales and higher maintenance capital expenditures.
Impact of Planned Turnaround on Cash Flow
The planned turnaround at the Petro 1 ethylene unit resulted in lower production and sales, affecting the distributable cash flow coverage ratio.
Global Economic Challenges
The global industrial and manufacturing activity remains soft, impacting the global chemical industry.
Company Guidance
During the Westlake Chemical Partners Third Quarter 2025 Earnings Conference Call, management provided detailed financial metrics and guidance. The Partnership reported a net income of $15 million or $0.42 per unit, while the consolidated net income, including OpCo's earnings, was $86 million on $309 million in consolidated net sales. Distributable cash flow for the quarter was also $15 million or $0.42 per unit, which marked a $3 million decrease from the prior year due to higher maintenance capital expenditures. Despite these challenges, the Partnership maintained a strong leverage ratio of approximately 1x and announced a quarterly distribution of $0.4714 per unit, marking 45 consecutive quarterly distributions since its IPO. Looking ahead, Westlake Chemical Partners plans to leverage its Ethylene Sales Agreement, renewed through the end of 2027, to ensure stable and predictable cash flows despite global economic challenges. Additionally, the Partnership sees potential growth in increasing its ownership interest in OpCo, seeking qualified income stream acquisitions, expanding ethylene facilities, and possibly negotiating higher margins in its Ethylene Sales Agreement.Westlake Chemical PRN Financial Statement Overview
Summary
Westlake Chemical PRN demonstrates solid financial health with strong profitability and operational efficiency. The income statement reflects stable margins and improving net income, while the balance sheet shows a balanced leverage position. Cash flow generation is strong, though recent declines in free cash flow warrant attention.Income Statement
Westlake Chemical PRN shows a stable revenue base with a slight growth in TTM. The gross profit margin is healthy at 30.8%, and the net profit margin improved to 10.6% in TTM, indicating efficient cost management. However, the revenue growth rate has been inconsistent, with a recent TTM growth of 2.9% following a decline in previous years. The EBIT and EBITDA margins are strong, reflecting operational efficiency.75
Positive
Balance Sheet
The company maintains a moderate debt-to-equity ratio of 0.79, indicating a balanced approach to leverage. The return on equity is robust at 23.7% in TTM, showcasing effective use of equity to generate profits. However, the equity ratio is relatively low, suggesting a higher reliance on debt financing.70
Positive
Cash Flow
Operating cash flow remains strong with a high coverage ratio of 5.31 in TTM, indicating good cash generation relative to net income. However, free cash flow has declined by 14.3% in TTM, which could be a concern if the trend continues. The free cash flow to net income ratio is solid at 0.71, suggesting efficient cash conversion.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.13B | 1.14B | 1.19B | 1.59B | 1.21B | 966.67M |
| Gross Profit | 349.62M | 418.94M | 387.46M | 377.37M | 441.71M | 378.88M |
| EBITDA | 388.88M | 507.59M | 472.14M | 470.33M | 519.56M | 456.88M |
| Net Income | 49.16M | 62.39M | 54.28M | 64.17M | 82.55M | 66.17M |
Balance Sheet | ||||||
| Total Assets | 1.27B | 1.29B | 1.32B | 1.37B | 1.48B | 1.36B |
| Cash, Cash Equivalents and Short-Term Investments | 37.94M | 58.32M | 58.62M | 64.78M | 17.06M | 17.15M |
| Total Debt | 399.67M | 399.67M | 399.67M | 399.67M | 399.67M | 399.67M |
| Total Liabilities | 458.30M | 458.64M | 460.59M | 468.27M | 508.00M | 441.35M |
| Stockholders Equity | 503.18M | 518.70M | 522.51M | 534.50M | 536.55M | 519.97M |
Cash Flow | ||||||
| Free Cash Flow | 209.10M | 436.03M | 405.18M | 409.62M | 327.27M | 336.43M |
| Operating Cash Flow | 292.56M | 485.00M | 452.00M | 463.74M | 408.44M | 373.40M |
| Investing Cash Flow | 11.54M | -88.97M | -75.94M | -12.00M | -64.30M | 2.03M |
| Financing Cash Flow | -326.37M | -396.33M | -382.23M | -404.01M | -344.24M | -378.20M |
Westlake Chemical PRN Technical Analysis
Positive
19.06
Price Trends
19.67
Positive
19.68
Positive
20.53
Positive
Market Momentum
0.60
Negative
74.82
Negative
89.17
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WLKP, the sentiment is Positive. The current price of 19.06 is below the 20-day moving average (MA) of 20.79, below the 50-day MA of 19.67, and below the 200-day MA of 20.53, indicating a bullish trend. The MACD of 0.60 indicates Negative momentum. The RSI at 74.82 is Negative, neither overbought nor oversold. The STOCH value of 89.17 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WLKP.
Westlake Chemical PRN Risk Analysis
Westlake Chemical PRN disclosed 2 risk factors in its most recent earnings report. Westlake Chemical PRN reported the most risks in the "Finance & Corporate" 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 PRN Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $756.38M | 15.38 | 9.61% | 9.90% | -0.82% | -20.35% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
58 Neutral | $668.36M | -863.21 | -0.13% | ― | 12.49% | 95.48% | |
58 Neutral | $425.53M | 8.24 | 6.62% | 3.81% | -5.05% | 35.01% | |
56 Neutral | $519.96M | -1.27 | -78.11% | ― | -9.75% | -386.63% | |
49 Neutral | $960.83M | ― | -18.65% | 8.27% | -7.81% | -334.15% | |
47 Neutral | $1.37B | -1.54 | ― | ― | -10.68% | 36.31% |
* Basic Materials Sector Average
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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.