On Jan 15, Zacks Investment Research upgraded specialty
Westlake Chemical Corp.
) to a Zacks Rank #1 (Strong Buy).
Westlake posted strong third-quarter 2013 results on healthy
gains from higher pricing and lower feedstock costs, stemming
from 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.
Westlake has delivered positive earnings surprises in the last
four quarters with an average beat of 20.61%. The company's
long-term estimated earnings per share growth rate is 6%.
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
Westlake also saw higher olefins and vinyls integrated product
margins in the third quarter, thanks to higher selling prices for
key products. Increased ethylene production at the company's Lake
Charles complex also contributed to olefins margin expansion.
Sales from Westlake's Olefins segment jumped roughly 26% year
over year to $679.3 million in the third quarter. The Vinyls
segment recorded sales increase of around 15% year over year to
Following the release of the third quarter results, the Zacks
Consensus Estimate for 2013 for Westlake has gone up 7.3% to
$8.65 per share. The Zacks Consensus Estimate for 2014 has also
increased 4.4% to $9.47.
Westlake begun operations at its new chlor-alkali plant
located at its vinyls manufacturing complex in Geismar, La. on
Dec 27. The new plant uses membrane technology and has an annual
production capacity of 350,000 electrochemical units (ECU's).
CHEMTURA CORP (CHMT): Free Stock Analysis
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WESTLAKE CHEM (WLK): Free Stock Analysis
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Westlake expects continued cost benefits from North American
shale gas production. The company continues to invest to capture
this cost advantage. The company is committed to boost
shareholder returns through higher dividend payouts. This is
evident as Westlake's Board declared a 20% hike in its quarterly
dividend to 22.5 cents per share from the previous payout of
18.75 cents per share in Aug 2013.
Other Stocks to Consider
Other companies in the specialty chemical space with favorable
Zacks Rank are
A. Schulman, Inc.
). All these carry a Zacks Rank #2 (Buy).