Westlake Chemical Hits New 52-Week High: What's Driving It?

Shares of chemical company Westlake Chemical Corporation (NYSE:WLK) , scaled a fresh 52-week high of $85.86 on Oct 13, before pulling back to eventually close the day at $84.42.

Westlake Chemical has a market cap of roughly $10.9 billion. Average volume of shares traded in the last three months is around 801.3K. The company has an expected long-term EPS growth of around 8.3%.

Shares of Westlake Chemical have moved up 19.9% in the last three months, outperforming the industry’s 12.5% growth.

Driving Factors

Westlake Chemical reported a solid performance in second-quarter 2017. Net income rose by roughly 37.5% to $152.8 million or $1.17 per share. Net earnings improved mainly due to earnings contribution of Axiall, lower effective tax rate, higher sales price of major products and lower costs associated with turnarounds and unplanned outages. Barring one-time items, earnings for the quarter were $1.21 per share, which surpassed the Zacks Consensus Estimate of $1.19.

The company also witnessed an increase of net sales by around 82.2% year over year to $1,979.2 million in the quarter, which benefited from higher sales contributed from Axiall and increased selling prices for major products.

Westlake Chemical has an impressive earnings surprise history as the company has topped the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 17.69%.

Westlake Chemical, in second-quarter 2017 earnings call, announced that results benefited from strong global demand of its key products and increasing prices in Vinyls segment. The company is making notable progress in integrating, improving activities and achieving the expected synergies associated with the acquisition of Axiall business. Westlake Chemical believes that continued investment and acquisition will help to fully leverage the improving Vinyls market.

The Axiall acquisition has diversified the company’s product portfolio and geographical operations, creating a North American leader in Olefins and Vinyls. The company is on track to realize around $120 million in synergies and cost savings related to the acquisition in 2017.

Westlake Chemical also remains committed to boost shareholder returns. The company, in August, declared a 10% increase in its quarterly dividend to 21 cents per share. Notably, this is the 52^nd consecutive quarterly dividend announced by the company since the completion of its IPO in August 2004.

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 de Chile S.A. (NYSE:SQM) , The Chemours Company (NYSE:CC) and FMC Corporation (NYSE:FMC) . 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%.

Chemours has an expected long-term earnings growth rate of 15.5%.

FMC has an expected long-term earnings growth rate of 11.3%.

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