Westlake (NYSE:WLK) Posts Earnings Results, Misses Expectations By $0.04 EPS

Key Points

• Westlake reported EPS of $0.45, missing analysts’ $0.49 estimate by $0.04, while revenue rose 5% year over year to $2.98 billion and topped expectations.
• The company generated $408 million in EBITDA and $220 million in free cash flow, but EBITDA fell about $275 million sequentially amid lower PEM prices, weaker HIP volumes, and higher input costs.
• PEM improvement efforts have delivered $500 million of uplift so far, while weakness in housing and residential construction continues to pressure HIP; management expects that construction weakness to persist into 2027.

Westlake (NYSE:WLK - Get Free Report) released its quarterly earnings data on Wednesday. The specialty chemicals company reported $0.45 EPS for the quarter, missing analysts' consensus estimates of $0.49 by ($0.04), FiscalAI reports. Westlake had a positive return on equity of 0.93% and a negative net margin of 10.94%. The company had revenue of $2.98 billion for the quarter, compared to the consensus estimate of $2.94 billion. During the same period last year, the firm earned ($0.29) earnings per share. The company's revenue for the quarter was up 5.0% compared to the same quarter last year.

Here are the key takeaways from Westlake's conference call:

• Westlake reported $408 million of EBITDA and $220 million of free cash flow, both higher year over year, but EBITDA fell about $275 million sequentially as PEM prices declined, HIP volumes weakened, and input costs rose.
• PEM EBITDA increased $125 million year over year to $215 million, supported by higher selling prices and the three-pillar improvement plan, which delivered $500 million of uplift through the first three quarters. Management remains on track for $600 million of full-year improvement, though PEM earnings are still below mid-cycle levels.
• HIP faced weaker housing activity, higher costs, and lower volumes; third-quarter EBITDA fell $20 million year over year. Westlake expects fourth-quarter HIP revenue of $900 million to $1 billion and a margin of about 13%, and anticipates continued residential-construction weakness into 2027.
• European energy costs and weak PVC demand pressured PEM, prompting the Cologne PVC facility closure and consolidation of sales at Wilhelmshaven. Management expects the restructuring and access to lower-cost feedstocks to improve European profitability from 2027, targeting cash-flow neutrality.
• Westlake ended the quarter with $2 billion in cash and investments and $5.1 billion in debt, while lowering 2026 capital-spending guidance by $50 million to $850 million. Management said it expects a significant working-capital release to support fourth-quarter cash flow.

Westlake Price Performance

NYSE WLK traded up $0.67 during trading on Wednesday, hitting $69.14. 544,026 shares of the company's stock were exchanged, compared to its average volume of 1,131,675. Westlake has a fifty-two week low of $56.33 and a fifty-two week high of $124.23. The company has a current ratio of 2.45, a quick ratio of 1.70 and a debt-to-equity ratio of 0.55. The company has a market cap of $8.84 billion, a PE ratio of -7.22 and a beta of 0.66. The stock's 50 day moving average price is $67.65 and its two-hundred day moving average price is $86.49.

Westlake Increases Dividend

The firm also recently declared a quarterly dividend, which was paid on Thursday, September 10th. Stockholders of record on Tuesday, August 25th were paid a $0.5330 dividend. This represents a $2.13 annualized dividend and a dividend yield of 3.1%. The ex-dividend date was Tuesday, August 25th. This is a positive change from Westlake's previous quarterly dividend of $0.53. Westlake's dividend payout ratio is -22.23%.

More Westlake News

Here are the key news stories impacting Westlake this week:

• Positive Sentiment: Revenue rose 5% year over year to about $2.98 billion, topping the roughly $2.94 billion consensus estimate. Westlake also swung to positive quarterly earnings from a loss a year earlier, and the company reported improved adjusted EBITDA. Westlake Swings to Q3 Adjusted Earnings, Revenue Rise
• Negative Sentiment: Quarterly earnings were $0.45 per share, below the $0.49 analyst consensus cited in the results coverage. The shortfall may temper the positive read-through from higher sales and the year-over-year recovery. Westlake Q3 Earnings and Revenues Lag Estimates

Analysts Set New Price Targets

A number of brokerages have recently weighed in on WLK. JPMorgan Chase & Co. lowered their target price on Westlake from $80.00 to $65.00 and set a "neutral" rating on the stock in a research note on Friday, October 16th. Wells Fargo & Company dropped their target price on Westlake from $89.00 to $68.00 and set an "equal weight" rating for the company in a report on Thursday, October 1st. Morgan Stanley set a $76.00 target price on shares of Westlake in a research report on Monday, October 26th. Weiss Ratings reaffirmed a "sell (d)" rating on shares of Westlake in a research report on Thursday, October 15th. Finally, Barclays began coverage on shares of Westlake in a report on Monday, October 12th. They issued an "underweight" rating and a $66.00 price objective for the company. Four investment analysts have rated the stock with a Buy rating, eight have issued a Hold rating and three have given a Sell rating to the company. According to data from MarketBeat, Westlake currently has a consensus rating of "Hold" and a consensus target price of $81.13.

Insider Buying and Selling

In related news, Chairman Albert Chao sold 38,873 shares of the business's stock in a transaction on Tuesday, August 11th. The shares were sold at an average price of $80.28, for a total value of $3,120,724.44. Following the sale, the chairman owned 642,880 shares of the company's stock, valued at $51,610,406.40. The trade was a 5.70% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through the SEC website. Corporate insiders own 1.40% of the company's stock.

About Westlake

Westlake Corporation is a global manufacturer of performance and essential materials, as well as products used in housing and infrastructure. Headquartered in Houston, Texas, the company serves customers in construction, packaging, healthcare, consumer products, automotive, and other industrial markets.

Westlake's materials portfolio includes chlor-alkali and derivative chemicals, polyethylene, PVC, vinyl intermediates, epoxy resins, and other specialty products. These materials are used in applications such as water treatment, coatings, adhesives, plastics, medical products, and packaging.

Through its housing and infrastructure businesses, Westlake also produces building products including vinyl siding, trim, roofing products, pipe, fittings, and related components.

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