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Westlake Chemical (WLK) Stock Up 23% in 6 Months: Here's Why

Westlake Chemical Corporation’s WLK shares have gained 23.1% over the past six months. The chemical maker has also outperformed its industry’s rise of 22.4% over the same time frame. Moreover, it has topped the S&P 500’s 14.2% rise over the same period.

Let’s take a look into the factors that are driving this Zacks Rank #1 (Strong Buy) stock.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

What’s Favoring WLK?

Solid first-quarter results and upbeat prospects stemming from strong demand for its products have contributed to the run-up in the company’s shares. Westlake Chemical’s earnings of $1.87 per share for the first quarter surpassed the Zacks Consensus Estimate of $1.56. Sales rose around 22% year over year to $2,357 million and also beat the Zacks Consensus Estimate of $1,998.2 million.

The company gained from increased sales prices and margins for most of its key products including polyethylene and polyvinyl chloride (PVC) resin, and strong demand in downstream building products business in the first quarter.

Westlake Chemical, in its first-quarter call, said that it expects continued strong global demand in polyethylene, PVC and downstream building products on strong markets for the downstream uses of its products including residential construction, packaging and healthcare. The company remains focused on operating its facilities safely and efficiently.

The company is expected to benefit from higher demand in its polyethylene business in specialty applications, especially food packaging, and strength in global demand for PVC resin. It is seeing strong demand in the downstream building products business on the back of new housing starts and spending on repair and remodeling activities.

Westlake Chemical should also gain from its capacity expansion projects, synergies of acquisitions, and actions to improve operating efficiency and reduce costs. It is also making disciplined investments, developing new products and leveraging its current products and footprint globally.

Moreover, earnings estimate revisions have the greatest impact on stock prices. Over the past two months, the Zacks Consensus Estimate for Westlake Chemical for the current year has increased around 47.3%. The consensus estimate for second-quarter 2021 has also been revised 52.4% upward over the same time frame.

 

Westlake Chemical Corporation Price and Consensus

 

Westlake Chemical Corporation Price and Consensus

Westlake Chemical Corporation price-consensus-chart | Westlake Chemical Corporation Quote

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Dow Inc. DOW, Nucor Corporation NUE and Cabot Corporation CBT.

Dow has a projected earnings growth rate of roughly 289.8% for the current year. The company’s shares have surged 59% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has a projected earnings growth rate of 260% for the current year. The company’s shares have rallied around 149% in a year. It currently sports a Zacks Rank #1.

Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have shot up 61% in the past year. It currently carries a Zacks Rank #2 (Buy).

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

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