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Westlake Chemical Bumps Up Share Buyback, Hikes Dividend

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Westlake Chemical Corporation’s (WLK - Free Report) board has authorized the repurchase of an additional $150 million of shares of its common stock under the current share repurchase program.

As of Aug 17, 2018, the company acquired roughly 6.5 million shares of common stock at total purchase price of around $360 million under the program. Following the expansion of the program, a total of roughly $290 million will be available for purchase.  

The expansion is immediately effective and repurchases will be made in privately negotiated transactions or through open market. Decisions regarding the timing and amount purchases under the program will be based on the company’s cash flow from operations, cash in hand and general market conditions. Also, the board has the right to discontinue the program any time.

Additionally, Westlake Chemical’s board declared regular dividend distribution of 25 cents per share, up 19% from 21 cents in the second quarter. The dividend is payable on Sep 12, 2018, to stockholders of record on Aug 28. Notably, this marks the 56th consecutive quarterly dividend declared by the company following the completion of its IPO in August 2004.

Westlake Chemical ended the second quarter with cash and cash equivalents of roughly $482 million, up 22% year over year. Total debt was $2,666 million at the end of the quarter, down 23.5% year over year. Cash flow from operations was around $324 million in the quarter, up around 0.3% year over year.

The stock has lost 22.7% in the past three months compared with the industry’s 13.8% decline.



Westlake Chemical’s adjusted earnings in the second quarter came in at $2.45, which missed the Zacks Consensus Estimate of $2.52.

The company stated that demand for products across its segments continues to be strong. It is also benefiting from investments made in 2017, which are improving operations and reliability.

The company is working diligently on capturing targeted synergies and cost reductions associated with the Axiall acquisition. It also remains focused on the recently-announced expansion in the Vinyls segment along with other opportunities that will improve operations.

 

Zacks Rank & Stocks to Consider

Westlake Chemical currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the basic materials space are Huntsman Corporation (HUN - Free Report) , Ingevity Corporation (NGVT - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has an expected long-term earnings growth rate of 8.5%. Its shares have returned 22.3% in a year.

Ingevity has an expected long-term earnings growth rate of 12%. Its shares have surged 76.5% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 19.7% in a year.

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