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Aggressive Growth

Westlake Chemical (WLK - Snapshot Report) is a Zacks #1 Rank (Strong Buy) after posting six upside surprises in the last seven quarters and getting higher estimates for 2012.

Company Description

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and fabricated building products. It operates in two segments, Olefins and Vinyls. The Olefins segment provides ethylene, polyethylene, styrene monomer, and various ethylene co-products, such as chemical grade propylene, crude butadiene, pyrolysis gasoline, and hydrogen. The company was founded in 1985 and is headquartered in Houston, Texas.

WLK Tops Expectations in Six of Last Seven

WLK has beaten the Zacks Consensus Estimate in six of the last seven quarters. Over the course of those six beats, Wall Street got wowed by results that topped expectations by as much as 72%.

Even huge beats were not enough to move the stock substantially, as the 72% beat moved the stock 7% and a 70% beat two quarters later moved the stock 2.5%. Fast forward to the September 2011 quarter for a $0.03 beat or roughly 3%, and the stock moves lower by nearly 6%.

WLK Recently Reported Earnings

On February 21, 2012 the company reported revenue of $859 million roughly $5 million more than the Zacks Consensus Estimate and higher than the $759 million reported in the year ago period. EPS of $0.40 was $0.26 below the estimate or a 40% miss.

Earnings Estimates Bumped Up

Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $3.93 in January 2012 to the current level of $4.26.

Valuations

WLK trades slightly higher than the industry average in terms of both trailing and forward PE. The multiple of 14.5x forward earnings gives aggressive growth investor and value investors that rare breed of a low multiple that could see expansion with continued revenue growth. Price to book and price to sales are two metrics that show WLK trading at a discount to the industry average.

The Chart

A quick look at the price and consensus chart shows that WLK has tracked earnings estimates closely for the better part of the last two years. With recent move in the stock driven by 2012 estimates, aggressive growth investors will keep an eye on future earnings revisions to get a heads up on where the stock is going. WLK is a Zacks #1 Rank (Strong Buy).

Westlake Chemical - ticker WLK>
 
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Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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