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Is Westlake Chemical (WLK) Poised for a Beat in Q2 Earnings?

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Westlake Chemical (WLK - Free Report) is slated to release second-quarter 2017 results before the market opens on Aug 3.

Westlake Chemical’s adjusted earnings came in at $1.26 per share in first-quarter 2017, beating the Zacks Consensus Estimate of 80 cents.

Westlake Chemical garnered $1,942.6 million in revenues in the first quarter, up around 99% year over year. Sales in the quarter benefited from higher sales volumes for major products and increased selling prices for caustic and North American polyvinyl chloride (PVC) resin. Revenues also surpassed the Zacks Consensus Estimate of $1,765 million.

The company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with an average positive surprise of 24.11%.

Shares of Westlake Chemical have moved up 13.1% in last three months, outperforming the 5.1% gain of its industry.


Let’s take a look at how things are shaping up for the forthcoming announcement.

What the Zacks Model Unveils?

Our proven model shows that Westlake Chemical is likely to beat estimates this quarter because it has the right combination of two key ingredients.

Zacks ESP: The Earnings ESP for Westlake Chemical is currently pegged at +5.04%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.25 and $1.19, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Westlake Chemical currently carries a Zacks Rank #2 (Buy).

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of an earnings beat. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Factors at Play

Westlake Chemical, in its first-quarter earnings call, said that it is witnessing strong global demand for its key products. Throughout 2017, the company expects to benefit from its expansion work in Calvert City ethylene plant and from new plant startups. Also, demand for all major products, including chlor-alkali, is anticipated to be healthy. Moreover, the company benefited from higher prices in the first quarter and expects to see full benefit of price increases in the second quarter.

Westlake Chemical is also committed toward boosting shareholders value through dividend payments. Also, improving its product portfolio remains a priority. Notably, the company is on the verge of completing a multi-year investment program of around $6 billion. It intends to maintain strong liquidity for funding growth investments in the quarters ahead.  

In addition, Westlake Chemical is progressing well toward integrating Axiall assets, acquired in Aug 2016. The buyout has diversified the company’s product portfolio and geographical operations, creating a North American leader in Olefins and Vinyls. The company is on track to realize approximately $200 million in synergies and cost savings, including roughly $125 million anticipated in 2017.

Stocks That Warrant a Look

Here are some other companies in the basic materials space you may want to consider as our model shows these too have the right combination of elements to post an earnings beat this quarter:

The Chemours Company (CC - Free Report) has an Earnings ESP of +4.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Endeavour Silver Corporation (EXK - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #3.

Iamgold Corporation (IAG - Free Report) has an Earnings ESP of +300.00% and carries a Zacks Rank #2.

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