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Westlake Chemical (WLK) Q3 Earnings Top, Revenues Trail

Westlake Chemical Corporation WLK recorded a net income of $210.8 million or $1.61 per share for third-quarter 2017, up roughly 220.9% from $65.7 million or 51 cents a year ago. Net earnings improved mainly due to earnings contribution of Axiall, lower transaction and integration-related costs related to buyout and higher sales price of major products.

Barring one-time items, earnings for the reported quarter were $1.65 per share, which topped the Zacks Consensus Estimate of $1.39.

Westlake Chemical reported net sales of $2,108.9 million, up around 65% year over year. Sales in the quarter benefited from contribution of Axiall acquisition and increased selling prices for major products. Revenues, however, missed the Zacks Consensus Estimate of $2,123 million.

Westlake Chemical Corporation Price, Consensus and EPS Surprise

 

Westlake Chemical Corporation Price, Consensus and EPS Surprise | Westlake Chemical Corporation Quote

 

Segment Highlights

Sales from the Olefins segment improved roughly 0.1% year over year to $502.2 million in the reported quarter. Operating income of the segment increased 39.6% year over year to $165.4 million supported by higher sales prices and higher operating rates, which were partly offset by higher energy and feedstock costs.

The Vinyls segment logged sales of $1,606.6 million, up roughly 105.5% year over year. Operating income of the segment was $216.5 million, roughly a ten-fold year-over-year increase from $22.2 million, aided by Axiall buyout and higher selling prices for major products, which were partly offset by higher energy prices.

Financial Position

Westlake Chemical ended the quarter with cash and cash equivalents of roughly $678.2 million, up 78.2% year over year.

Long-term debt was $3,349.4 million at the end of reported quarter, down 9% year over year from $3,680.6 million.

Cash flow from operations was around $962.7 million for the first nine months of 2017, up 76.9% year over year.

Outlook

According to Westlake Chemical, third-quarter 2017 results benefited from demand for all major products in both Vinyls and Olefins segments along with higher prices in the Vinyls segment. Moving forward, the company believes that the Axiall buyout and continued investments to improve the reliability and operational efficiency of its assets will enable it to fully leverage the improving Vinyls market.

Price Performance

Shares of Westlake Chemical have moved up 31.7% in last three months outperforming the 23% growth recorded by its industry.

 



 

Zacks Rank & Other Stocks to Consider

Westlake Chemical currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space are Sociedad Quimica y Minera S.A. SQM, Southern Copper Corporation SCCO and POSCO PKX. All three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

Sociedad Quimica has an expected long-term earnings growth rate of 32.5%.

Southern Copper has an expected long-term earnings growth rate of 35.1%.

POSCO has an expected long-term earnings growth rate of 5%.

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Westlake Chemical Corporation (WLK): Free Stock Analysis Report
 
Sociedad Quimica y Minera S.A. (SQM): Free Stock Analysis Report
 
Southern Copper Corporation (SCCO): Free Stock Analysis Report
 
POSCO (PKX): Free Stock Analysis Report
 
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