Westlake Chemical Corp
) reached a new 52-week high of $85.94 on Jul 3 to close the
trading session a notch lower at $85.66.
The specialty chemicals company has a market cap of roughly $11.4
billion and has seen its shares shot up around 76% over the past
one year. Its year-to-date return is 40.8%, much higher than the
S&P 500's total return of 8.5%. Average volume of shares traded
over the last three months is 675.6K. The company's long-term
projected EPS growth is 5%.
What's Driving WLK Up?
Westlake's first-quarter 2014 earnings were $1.18 per share, up
from 92 cents per share in the year-ago quarter, topping the Zacks
Consensus Estimate of $1.13 per share. The company reported a
profit of $158 million in the first quarter, increasing roughly 28%
from $123.3 million recorded in the prior-year quarter.
Revenues in the reported quarter were $1,027.7 million,
increasing roughly 19% year over year from $864.6 million a year
ago and beating the Zacks Consensus Estimate of $964 million.
Westlake posted strong first-quarter results on higher olefins
volumes and improved integrated product margins in the quarter, as
higher selling prices more than offset the rise in feedstock and
energy costs over the prior year. Moreover, the company saw higher
sales volumes for polyethylene and ethylene, higher selling prices
for key products and contributions from its specialty PVC pipe
business (acquired in May 2013) in the quarter.
Although the company reported solid income from the Olefins
segment, Westlake reported an operating loss in the Vinyls segment
during the quarter.
Westlake in May 2014, agreed to buy Ismaning, Germany-based
Vinnolit Holdings GmbH and its subsidiaries from private equity
firm Advent International for €490 million (roughly $667 million).
Vinnolit is a leading producer of specialty polyvinyl chloride
Vinnolit owns a world class R&D facility in Gendorf and
applications laboratory in Burghausen and its products are used
across a vast spectrum of industrial and building product
applications including automotive sealants, cable sheathing,
flooring, medical applications, pipes, rigid film and technical
This acquisition is a strategic fit for Westlake and is expected to
broaden its global chlorvinyl footprint. It will add key specialty
PVC products and technology to the company's portfolio. Westlake
also acquired CertainTeed Corporation's Pipe and Foundation Group
(PFG) for about $175 million in cash on May 1.
These acquisitions combined with the company's strong financial
position are expected to drive growth in the coming quarters. The
wide product horizon of the company along with its cost saving
measures and innovations positions it well for solid gains in the
Westlake currently holds a Zacks Rank #2 (Buy).
Other stocks to consider in the chemical-plastics space with a
favorable Zacks Rank are
Kuraray Co. Ltd.
A. Schulman, Inc.
). All of these stocks carry a Zacks Rank #2 (Buy).
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