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Westlake's (WLK) Earnings & Revenues Top Estimates in Q4

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Westlake Corporation (WLK - Free Report) logged a profit of $644 million or $4.98 per share in the fourth quarter of 2021, rising from $113 million or 87 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $4.62 per share.

Sales climbed around 78% year over year to $3,507 million in the quarter. It also outpaced the Zacks Consensus Estimate of $3,027.5 million. The top line was boosted by higher sales prices and margins across most of the company’s businesses.

Westlake benefited from the continued strength in the residential construction market, which along with strong repair and remodeling markets, led to strong demand and pricing for polyvinyl chloride (PVC) resin and higher demand in its Housing and Infrastructure Products business. The company’s Performance and Essential Materials business also witnessed strength in polyethylene for packaging and consumer markets.

 

Westlake Corp. Price, Consensus and EPS Surprise

 

Westlake Corp. Price, Consensus and EPS Surprise

Westlake Corp. price-consensus-eps-surprise-chart | Westlake Corp. Quote

 

Segment Highlights

The company has changed its name to Westlake Corporation from Westlake Chemical Corporation to reflect its more diversified business portfolio. It has also reorganized its reporting segments. Its two newly established reporting segments are Performance and Essential Materials and Housing and Infrastructure Products.

Sales in the Performance and Essential Materials segment went up around 72% year over year to $2,460 million in the reported quarter. Operating income in the segment was $821 million, shooting up from $143 million a year ago.  The upside was led by higher prices for products in the segment on the back of strong demand.

The Housing and Infrastructure Products segment generated sales of $1,047 million, increasing around 97% year over year. Operating income in the segment was $86 million, up from $65 million a year ago. The upside was mainly due to strong housing and remodeling activity that led to healthy demand and increased prices for all products in the segment.

FY21 Results

Earnings for full-year 2021 were $15.58 per share compared with $2.56 per share a year ago. Revenues rose roughly 57% year-over-year to $11.8 billion for the full year. 

Financial Position

Westlake ended the year with cash and cash equivalents of $1,908 million, up around 45% year over year. Long-term debt was $4,911 million, up around 38%.

Cash flow from operations was $2,394 million in 2021, up roughly 85% year over year.

Outlook

The company said that market conditions remain favorable in 2022. It is well-placed to continue to provide value to customers and investors leveraging its market leading position in Performance and Essential Materials including PVC, polyethylene, epoxy, chlorine and caustic soda. The outlook is also positive for Housing and Infrastructure Products with strong market indicators in 2022, Westlake noted.

Westlake has developed a larger platform for growth with the Housing and Building Products acquisitions in 2021 and the epoxy acquisition in early 2022, which is expected to drive value through its integrated chain. It sees these businesses to significantly contribute to earnings this year.

Zacks Rank & Other Stocks to Consider

Westlake carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Commercial Metals Company (CMC - Free Report) , Cabot Corporation (CBT - Free Report) and AdvanSix Inc. (ASIX - Free Report) .

Commercial Metals, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has rallied around 34% in a year.

Cabot, carrying a Zacks Rank #1, has an expected earnings growth rate of 15.4% for the current fiscal year. CBT's consensus estimate for the current fiscal year has been revised 7.8% upward over the past 60 days.

Cabot beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 21.6%. CBT shares have gained around 41% in a year.

AdvanSix, carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 7.7% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 3.2% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 27% in a year.


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