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Westlake Chemical Hits New 52-Week High: What's Driving it?

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Shares of Westlake Chemical Corporation (WLK - Free Report) scaled a fresh 52-week high of $124.30 on May 22, before eventually closing the day at $122.14.

The company has a market cap of roughly $15.8 billion. Average volume of shares traded in the past three months was around 799.1K. Westlake Chemical expected long-term earnings per share growth rate of 12.2%.

The company shares have moved up 93.2% over a year, significantly outperforming the industry’s 53.3% rise.

Driving Factors

Westlake Chemical saw its profits jump roughly two-fold year over year in the first quarter of 2018, boosted by higher selling prices for key products, increased sales volumes for caustic soda and PVC (polyvinyl chloride) resin, benefits of lower U.S. corporate tax rate and a gain from redemption of debt.

Adjusted earnings for the quarter were $2.24 per share, which topped the Zacks Consensus Estimate of $2.09.

Revenues rose roughly 11% year over year to $2,150 million, beating the Zacks Consensus Estimate of $2,101 million. Sales in the quarter benefited from higher prices for major products and increased sales volumes for caustic soda and PVC resin that more than offset reduced polyethylene sales volume.

Westlake Chemical, in its first-quarter call, noted that demand for products across its segments remains strong due to continued growth in the Americas, Europe and Asia. Moreover, it is benefiting from the investments made last year to improve its operations and reliability.

Westlake Chemical is gaining from contributions of Axiall acquisition, increased demand and higher selling prices for major products. The Axiall acquisition has diversified the company’s product portfolio and geographical operations, creating a North American leader in Olefins and Vinyls. The company expects to realize $250 million of cost reduction synergies related to the acquisition in 2018.

Westlake Chemical is also working diligently on the recently announced expansions in its Vinyls segment. This additional production capacity will help the company address the growing needs of its global customers.

Westlake Chemical Corporation Price and Consensus

Zacks Rank & Other Stocks to Consider

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

Some other top-ranked companies in the basic materials space worth considering are FMC Corporation (FMC - Free Report) , Huntsman Corporation (HUN - Free Report) and The Chemours Company (CC - Free Report) . All three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corp has an expected long-term earnings growth rate of 13.6%.  Its shares have gained around 22.2% over a year.

Huntsman has an expected long-term earnings growth rate of 8.3%.  Its shares have moved up around 27% over a year.

Chemours has an expected long-term earnings growth rate of 15.5%.  Its shares have gained around 20% over a year.

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