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Why Is Westlake (WLK) Down 11% Since Last Earnings Report?
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It has been about a month since the last earnings report for Westlake Chemical (WLK - Free Report) . Shares have lost about 11% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Westlake due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Westlake Chemical logged a profit of $607 million or $4.69 per share in the third quarter of 2021, skyrocketing from $57 million or 45 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $4.01 per share. The company achieved consecutive record quarterly earnings as it reaped benefits of the global economic expansion.
Sales rose 61% year over year to $3,055 million from $1,898 million. The top line also outpaced the Zacks Consensus Estimate of $2,716.2 million.
The company benefited from a global economic rebound, increased sales prices and margins for most of its key products, and strength in demand in the building and construction materials business in the quarter.
Segment Highlights
Sales in the Vinyls segment went up 54% year over year to $2,348 million in the reported quarter. Operating income in the segment was $601 million, shooting up from $42 million. The upside was led by higher sales prices, margins and volumes, and strong earnings in the building products business.
The Olefins segment generated sales of $707 million, increasing 92% year over year. Operating income in the segment was $281 million, shooting up from $51 million. The upside was mainly due to higher sales prices and margins for all products, driven by strong global demand.
Financial Position
Westlake Chemical ended the quarter with cash and cash equivalents of $3,571 million, up around threefold year over year. Long-term debt was $4,929 million, up 34%.
Cash flow from operations was $755 million in the quarter, skyrocketing nearly 112% year over year.
Outlook
The company noted that it expects that the recently completed acquisitions of LASCO Fittings, Boral North America and Dimex, totaling around $2.6 billion, will initiate a stage of development and growth for its building products business. The LASCO buyout is expected to add to Westlake subsidiary NAPCO’s product portfolio with a focus on new markets and products. The Dimex acquisition adds a range of post-industrial recycled plastic consumer and building products. Westlake has also secured a leading position in the growing building products and construction markets through the Boral North America buyout. The company is optimistic that the investments will strengthen its footprint in the sustainable building product markets and provide long-term growth opportunities.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 42.07% due to these changes.
VGM Scores
At this time, Westlake has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Westlake has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Westlake (WLK) Down 11% Since Last Earnings Report?
It has been about a month since the last earnings report for Westlake Chemical (WLK - Free Report) . Shares have lost about 11% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Westlake due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Westlake Chemical's Q3 Earnings & Sales Beat Estimates
Westlake Chemical logged a profit of $607 million or $4.69 per share in the third quarter of 2021, skyrocketing from $57 million or 45 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $4.01 per share. The company achieved consecutive record quarterly earnings as it reaped benefits of the global economic expansion.
Sales rose 61% year over year to $3,055 million from $1,898 million. The top line also outpaced the Zacks Consensus Estimate of $2,716.2 million.
The company benefited from a global economic rebound, increased sales prices and margins for most of its key products, and strength in demand in the building and construction materials business in the quarter.
Segment Highlights
Sales in the Vinyls segment went up 54% year over year to $2,348 million in the reported quarter. Operating income in the segment was $601 million, shooting up from $42 million. The upside was led by higher sales prices, margins and volumes, and strong earnings in the building products business.
The Olefins segment generated sales of $707 million, increasing 92% year over year. Operating income in the segment was $281 million, shooting up from $51 million. The upside was mainly due to higher sales prices and margins for all products, driven by strong global demand.
Financial Position
Westlake Chemical ended the quarter with cash and cash equivalents of $3,571 million, up around threefold year over year. Long-term debt was $4,929 million, up 34%.
Cash flow from operations was $755 million in the quarter, skyrocketing nearly 112% year over year.
Outlook
The company noted that it expects that the recently completed acquisitions of LASCO Fittings, Boral North America and Dimex, totaling around $2.6 billion, will initiate a stage of development and growth for its building products business. The LASCO buyout is expected to add to Westlake subsidiary NAPCO’s product portfolio with a focus on new markets and products. The Dimex acquisition adds a range of post-industrial recycled plastic consumer and building products. Westlake has also secured a leading position in the growing building products and construction markets through the Boral North America buyout. The company is optimistic that the investments will strengthen its footprint in the sustainable building product markets and provide long-term growth opportunities.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 42.07% due to these changes.
VGM Scores
At this time, Westlake has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Westlake has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.