On Sep 13, Zacks Investment Research upgraded specialty
Westlake Chemical Corp.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Westlake delivered impressive second-quarter 2013 results on Jul
30. The company has delivered positive earnings surprises in the
last 4 quarters with an average beat of 18.51%.
Westlake reported second-quarter earnings of $2.17 per share, up
roughly 26% from 1.72 per share in the year-ago quarter,
exceeding the Zacks Consensus Estimate of $1.95. Earnings were
aided by lower cost natural-gas based ethylene production
stemming from North American shale gas and oil production.
During the second quarter, Westlake closed its acquisition of
CertainTeed Corporation's Pipe and Foundation Group (PFG) for
about $175 million in cash. The acquisition is a strategic fit
for Westlake as it enhances the company's North American Pipe and
building products portfolio by adding specialty product lines and
In August, Westlake also announced a 20% hike in its quarterly
dividend. The dividend has now increased to 22.5 cents per share
from the previous payout of 18.75 cents that was paid in the
second quarter of 2013.
Westlake has a flexible capital structure which offers it with a
number of options as it considers growth prospects and new
investment opportunities, both internally and externally. The
company expects capital expenditures to remain between $500
million to $550 million in 2013.
Westlake's capital investments includes the Lake Charles ethylene
expansion that was completed in the first quarter of 2013, the
construction of its Geismar chlor-alkali plant that is scheduled
to be completed in the fourth quarter of 2013, and the long lead
items related to its Calvert City ethylene plant feedstock
conversion and expansion project that will be completed in 2014.
This flexibility allows Westlake to maintain its conservative
approach to growth and pursue projects that bring value to its
The Zacks Consensus Estimate for 2013 for Westlake has gone up
8.4% to $8.00 per share as all estimates were revised higher over
the last 60 days. The Zacks Consensus Estimate for 2014 has also
risen by 8.8% to $8.93 over the same period due to upward
Other Stocks to Consider
Other companies in the basic materials sector that are worth
Minerals Technologies Inc.
). All of them carry a Zacks Rank #2 (Buy).
FERRO CORP (FOE): Free Stock Analysis Report
MINERAL TECH (MTX): Free Stock Analysis
POLYONE CORP (POL): Free Stock Analysis
WESTLAKE CHEM (WLK): Free Stock Analysis
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