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Westlake Chemical Up 32% in 3 Months: What's Driving It?

Zacks Equity Research
Updated

Shares of Westlake Chemical Corporation WLK have gained around 32% over the last three months. The company has also outperformed its industry’s gain of roughly 25% to over the same time frame.  

Westlake Chemical has a market cap of roughly $12.2 billion. Average volume of shares traded in the last three months is around 789.3K. The company has an expected long-term earnings per share growth of 10.4%.

Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.



 

Driving Factors

Solid third-quarter results have contributed to a rally in the company’s shares. Westlake Chemical recorded a net income of $210.8 million or $1.61 per share for the quarter, a more than three-fold surge from $65.7 million or 51 cents a year ago. Barring one-time items, earnings for the reported quarter were $1.65 per share, which topped the Zacks Consensus Estimate of $1.39.

Net sales jumped 65% year over year to $2,108.9 million. Sales in the quarter benefited from significant contribution of Axiall acquisition, improved demand and increased selling prices for major products.

Westlake Chemical has an impressive earnings surprise history as the company has topped the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive surprise of 23.5%.

Westlake Chemical, in its third-quarter call, said that its results benefited from increased demand for all major products in both Vinyls and Olefins segments along with higher prices in the Vinyls segment. The company sees increased ethylene availability with the start-up of new ethylene plants and completion of capacity expansions.

The company believes that the Axiall buyout and continued investments to improve the reliability and operational efficiency of its assets will enable it to fully leverage the improving Vinyls market. It also sees favorable demand trends for all of its major products to continue moving ahead.

Westlake Chemical should continue to benefit from the Axiall acquisition. The acquisition has diversified the company’s product portfolio and geographical operations, creating a North American leader in Olefins and Vinyls. The company is on track to realize around $120 million in synergies and cost savings related to the acquisition in 2017.

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Westlake Chemical Corporation Price and Consensus

 

Westlake Chemical Corporation Price and Consensus | Westlake Chemical Corporation Quote

Other Stocks to Consider

Other top-ranked companies in the basic materials space include Ingevity Corp. NGVT, Kraton Corp. KRA and ArcelorMittal MT, all sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 34% year to date.

Kraton has an expected earnings growth of 25.4% for the current year. Its shares are up roughly 67% year to date.

ArcelorMittal has an expected long-term earnings growth rate of 11.3%. Its shares have rallied 29.2% year to date.

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Westlake Chemical Corporation (WLK) : Free Stock Analysis Report
 
Kraton Corporation (KRA) : Free Stock Analysis Report
 
Ingevity Corporation (NGVT) : Free Stock Analysis Report
 
ArcelorMittal (MT) : Free Stock Analysis Report
 
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