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Westlake Chemical Scales New 52-Week High on Bright Prospects

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Shares of chemical company Westlake Chemical Corporation (WLK - Free Report) , scaled a fresh 52-week high of $72.55 on Aug 23, before pulling back to eventually close the day at $72.40.

Westlake Chemical has a market cap of roughly $9.3 billion. Average volume of shares traded in the last three months is around 788k.

Shares of Westlake Chemical have moved up 15.2% in the last three months, significantly outperforming the industry’s 4.6% growth.


 

Driving Factors

Westlake Chemical recorded a net income of $152.8 million or $1.17 per share for the second quarter of 2017, up roughly 37.5% from $111.1 million or 85 cents per share a year ago. Net earnings improved mainly due to earnings contribution of Axiall, lower effective tax rate, higher sales price of major products and lower costs associated with turnarounds and unplanned outages. Barring one-time items, earnings for the reported quarter were $1.21 per share, which topped the Zacks Consensus Estimate of $1.19.

Westlake Chemical also witnessed an increase of net sales by around 82.2% year over year to $1,979.2 million. Sales in the quarter benefited from higher sales contributed from Axiall and increased selling prices for major products.

Westlake Chemical also has an impressive earnings surprise history as the company has topped the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 17.69%.

Recently, the company announced a regular dividend of 21 cents per share. The figure represents a 10% hike from 19.06 cents in the second quarter of 2017. Notably, this is the 52nd consecutive quarterly dividend announced by the company since the completion of its IPO in August, 2004.  

Westlake Chemical, in second-quarter 2017 earnings call, announced that results benefited from strong global demand of its key products and increasing prices in Vinyls segment. The company is making notable progress in integrating, improving activities and achieving the expected synergies associated with the acquisition of Axiall business. Westlake Chemical believes that continued investment and acquisition will help to fully leverage the improving Vinyls market.

Zacks Rank & Key Picks

Westlake Chemical currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are The Chemours Company (CC - Free Report) , POSCO (PKX - Free Report) and Kronos Worldwide Inc. (KRO - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Chemours has expected long-term earnings growth rate of 15.5%.

POSCO has expected long-term earnings growth rate of 5%.

Kronos has expected long-term earnings growth rate of 5%.

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