Westlake Hikes Dividend, Splits Stock - Analyst Blog


Specialty chemicals company Westlake Chemical Corp. ( WLK ) has announced a two-for-one split of its common stock and increased its quarterly cash dividend on the common stock by 12% to 25.2 cents per share from the prior payout of 22.5 cents per share on a pre-split basis. The raised dividend will be paid on Mar 18, 2014, to stockholders of record as of Feb 28, 2014.

An additional share will be issued to Westlake's shareholders for each share held by them. The two-for-one common stock split will be executed through a stock dividend and will be distributed to shareholders of record as of Feb 28, 2014 on Mar 18, 2014. Westlake expects the split-adjusted shares to begin trading on Mar 19, 2014.

This represents the second dividend hike in less than a year. The previous dividend hike was declared on Aug 26, 2013, and the increase was 20% to 22.5 cents per share from the prior payout of 18.75 cents a share.

The moves adopted by Westlake testify its commitment to boost shareholders' value, while retaining the financial strength of the company. The stock split will also encourage the company to deliver strong earnings.

Westlake posted strong third-quarter 2013 results on healthy gains from higher pricing and lower feedstock costs, stemming from the North American shale gas production. The company's earnings for the quarter climbed to $2.54 per share from $1.30 per share a year ago, outshining the Zacks Consensus Estimate of $2.21. Profit zoomed roughly 96% year over year to $170.3 million.

Revenues rose roughly 22% year over year to around $1,004 million in the quarter, beating the Zacks Consensus Estimate of $935 million. In the quarter, Westlake benefited from increased sales volumes for styrene and caustic, higher selling prices and contributions from its specialty PVC pipe business (acquired in May 2013).

Westlake expects continued cost benefits from the North American shale gas production. The company continues to invest to capture this cost advantage.

Westlake, which currently carries a Zacks Rank #1 (Strong Buy), will release its fourth-quarter 2013 results on Feb 20 before market opens.

Other companies in the specialty chemical space with a favorable Zacks Rank are Kraton Performance Polymers Inc. ( KRA ), A. Schulman, Inc. ( SHLM ) and Globe Specialty Metals, Inc. ( GSM ), all of which hold a Zacks Rank #2 (Buy).

GLOBE SPECIALTY (GSM): Free Stock Analysis Report

KRATON PERFORM (KRA): Free Stock Analysis Report

SCHULMAN(A) INC (SHLM): Free Stock Analysis Report

WESTLAKE CHEM (WLK): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: GSM , KRA , A , SHLM , WLK



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