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Westlake's (WLK) Earnings & Revenues Top Estimates in Q1

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Westlake Corporation (WLK - Free Report) logged a profit of $756 million or $5.83 per share in the first quarter of 2022, rising from $242 million or $1.87 cents per share in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $4.70 per share.

Sales climbed around 72% year over year to $4,056 million in the quarter. It also outpaced the Zacks Consensus Estimate of $3,440.2 million. The top line was boosted by higher sales prices across most of the company’s businesses. Westlake also gained from contributions of the new businesses acquired in second-half 2021 and early this year.

Westlake benefited from the continued strength in the residential construction market on strong repair and remodeling markets, which led to strong demand and pricing for polyvinyl chloride (PVC) resin and higher demand in its Housing and Infrastructure Products unit. 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

Sales in the Performance and Essential Materials segment went up around 63% year over year to $2,832 million in the reported quarter. Operating income in the segment was $879 million, a roughly three-fold year-over-year increase.  The upside was led by higher prices for major products in the segment on the back of strong demand in manufacturing, packaging and construction markets.

The Housing and Infrastructure Products segment generated sales of $1,224 million, nearly doubling from the year-ago quarter. Operating income in the segment was $185 million, up around 161% from 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.

Financial Position

Westlake ended the quarter with cash and cash equivalents of $1,055 million, down around 24% year over year. Long-term debt was $4,902 million, up around 38%.

Cash flow from operations was $700 million in the reported quarter, up roughly 164% year over year.

Outlook

The company said that market conditions remain favorable amid the volatility driven by economic and geopolitical factors that could impact its businesses. Westlake remains confident in its business fundamentals, which it expects to allow it to deliver more resilient earnings and cash flows in a variety of economic environments.

Westlake reaffirmed its capital expenditures guidance in the band of $750- $850 million for 2022.

Zacks Rank & Other Stocks to Consider

Westlake currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Commercial Metals Company (CMC - Free Report) and AdvanSix Inc. (ASIX - Free Report) .

Steel Dynamics, sporting a Zacks Rank #1, has an expected earnings growth rate of 18.5% for the current year. The Zacks Consensus Estimate for STLD's current-year earnings has been revised 32.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being roughly 2.5%. STLD has gained around 29% in a year.

Commercial Metals, carrying a Zacks Rank #1, has a projected earnings growth rate of 78.2% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 31.9% upward over the past 60 days.

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 16%, on average. CMC has gained around 23% in a year.

AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 63.4% for the current year. ASIX's consensus estimate for current-year earnings has been revised 31.9% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 23.6%, on average. ASIX has rallied around 48% in a year.

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