Westlake Chemical Corporation (WLK - Free Report) saw lower profits in the third quarter of 2019, hurt by reduced sales prices for its major products. The chemical maker posted a profit of $158 million or $1.22 per share for the quarter, down around 49% from $308 million or $2.35 it earned in the year-ago quarter. However, earnings topped the Zacks Consensus Estimate of $1.02.
Sales fell roughly 8% year over year to $2,066 million. The figure also missed the Zacks Consensus Estimate of $2,131.4 million.
Lower global sales prices for key products due to trade uncertainties and a slower global economic growth were, in part, masked by reduced ethane feedstock and fuel costs.
Sales in the Olefins segment fell 17% year over year to $448 million in the quarter. Operating income in the segment tumbled roughly 43% to $92 million. The decline was mainly due to reduced sales prices for major products resulting from higher olefins production.
The Vinyls segment generated sales of $1,618 million, down around 6% year over year. Operating income in the segment was $153 million, down around 39% year over year. The decline was caused by reduced sales prices for caustic soda and PVC (polyvinyl chloride) resin.
Westlake Chemical ended the quarter with cash and cash equivalents of $1,437 million, up around 82% year over year. Long-term debt was $3,424 million, up 28% year over year.
Cash flow from operations was $968 million for the first nine months of 2019, down around 16% year over year. Cash flow from operations was $501 million for the reported quarter.
Westlake Chemical noted that it is facing challenges from a difficult pricing environment due to slower global growth as a result of trade tensions. Amid this backdrop, the company remains focused on controlling costs and investing in a number of initiatives globally which it expects to boost long-term value for shareholders.
Shares of Westlake Chemical have lost 6.2% in a year’s time compared with the industry’s 15.9% decline.
Zacks Rank & Key Picks
Westlake Chemical currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth a look in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Kinross Gold Corporation (KGC - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied 64% in a year’s time.
Kinross has projected earnings growth rate of 210% for the current year. The company’s shares have surged around 77% in a year’s time.
Franco-Nevada has estimated earnings growth rate of 39.3% for the current year. The company’s shares have gained roughly 46% in a year’s time.
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