Westlake Corporation (WLK) | Investment Case

1. Company Snapshot

1.a. Company Description

Westlake Corporation manufactures and supplies petrochemicals, polymers, and building products worldwide.It operates through two segments, Performance and Essential Materials; and Housing and Infrastructure Products.The Performance and Essential Materials segment manufactures and markets polyethylene, styrene monomer, ethylene co-products, PVC, VCM, ethylene dichloride chlor-alkali, and chlorinated derivative products.

The Housing and Infrastructure Products segment manufactures and sells residential PVC siding; PVC trim and moldings; roofing applications; decorative stone; windows; PVC decking; PVC films for various inflatables, wallcovering, tape, and roofing applications; polymer composite roof tiles; PVC pipe and fittings; PVC compounds; and various consumer and commercial products such as landscape edging; industrial, home and office matting; marine dock edging; and masonry joint controls.The company offers its products to a range of customers, including chemical processors, plastics fabricators, small construction contractors, municipalities, and supply warehouses for use in various consumer and industrial markets, including residential construction, flexible and rigid packaging, automotive products, healthcare products, water treatment, and coatings, as well as other durable and non-durable goods.The company was formerly known as Westlake Chemical Corporation and changed its name to Westlake Corporation in February 2022.

The company was founded in 1986 and is headquartered in Houston, Texas.Westlake Corporation is a subsidiary of TTWF LP.

Show Full description

1.b. Last Insights on WLK

Westlake Corporation's recent performance was positively driven by its Q4 2025 earnings beat, despite a sales miss. The company's net sales were $2,533 million, with a quarterly loss of $0.25 per share, beating the Zacks Consensus Estimate. Westlake's cost-saving initiatives, including facility shutdowns and restructuring, are expected to yield $600 million in savings by 2026. The company's HIP segment shows resilience, with exposure to electrification trends in Europe. Additionally, Westlake declared a quarterly dividend of $0.53 per share, marking 22 years of consecutive dividend payments.

1.c. Company Highlights

Last Price	116.11
Change Percentage	-0.61%
Open	117
Previous Close	116.82
Market Cap ( Millions)	14894
Volume	371388
Year High	119.69
Year Low	56.33
M A 50	100.31
M A 200	83.13

FCF Yield	-3.55%
Dividend Yield	1.82%
ROE	-15.50%
Debt / Equity	73.23%
Net Debt / EBIDTA	-1866.33%
Price To Book	1.71
Price Earnings Ratio	-9.95
Price To FCF	-28.18
Price To sales	1.34
EV / EBITDA	-93.71

2. Westlake Corporation's 2025 Earnings Report: A Review of Financial Performance and Future Outlook

Westlake Corporation reported a fourth quarter EBITDA of $196 million, net of $511 million of identified items related to restructuring plans. The company's full-year 2025 performance was impacted by macroeconomic challenges and volatility in trade policies. The actual EPS came out at '-4.22' relative to estimates at '-1.47458'. Revenue for the HIP segment experienced a year-over-year decline due to lower new housing construction activity in North America, partially offset by solid municipal pipe sales volumes. The company's EBITDA margin was affected by the decline in sales volume and pricing pressure.

Publication Date: Feb -25

                                    📋 Highlights
                                    Q4 EBITDA Adjustments::
                                                Fourth quarter EBITDA of $196,000,000 reflects $511,000,000 in restructuring and cost reset costs.
2025 Cost Savings::
                                                Delivered $170,000,000 in structural cost reductions, driven by HIP segment resilience amid lower North American housing demand.
PEM Earnings Recovery::
                                                $200,000,000 expected improvement in 2026 from footprint optimization, plant reliability, and structural cost cuts (each contributing $200,000,000).
HIP 2026 Outlook::
                                                Revenue guidance of $4.4B–$4.6B with 19–21% EBITDA margin, reflecting seasonal strength in Q2/Q3 and $200M price increase momentum.
Liquidity & Tax Efficiency::
                                                $2.9B in cash/securities and a 17% effective tax rate in 2026 due to 2025 net operating losses, enabling $100M capex reduction.

                                

Segment Performance

The Performance Materials (PEM) segment's fourth quarter EBITDA decreased by $45 million sequentially, driven by 5% lower average sales price and 2% lower sales volume. However, the company expects to see an improvement in earnings of $200 million in 2026 from footprint optimization, $200 million from better plant reliability, and $200 million from structural cost reductions. The company's proactive steps in the three-pillar initiative, focusing on removing losses, taking cost reduction initiatives, and improving reliability, contributed to the outperformance on an adjusted basis in the fourth quarter.

Outlook and Guidance

For 2026, Westlake expects revenue in its HIP segment to be between $4.4 billion and $4.6 billion with an EBITDA margin of 19% to 21%. The company expects a $100 million year-over-year reduction in capital expenditures and an effective tax rate of approximately 17%. The company's guidance is based on its three-pillar action plan, which includes footprint optimization, cost reduction, and improved reliability. As Mark Steven Bender stated, "We expect to drive real cost savings, improvement in reliability, and become a cash flow-positive generating business."

Valuation Metrics

Westlake Corporation's current valuation metrics indicate a P/E Ratio of -8.9, P/B Ratio of 1.53, and EV/EBITDA of -44.9. The company's dividend yield is 2.03%. Analysts estimate next year's revenue growth at 4.7%. These metrics suggest that the market is pricing in a challenging near-term outlook for the company, but the expected improvements in earnings and cash flow generation could potentially drive a re-rating of the stock.

Operational Highlights

The company has taken proactive steps to strengthen its global manufacturing footprint and is focused on execution, cost discipline, and value-driven growth. Westlake's diversified and complementary portfolio of businesses, vertically integrated business model, and globally advantaged feedstock and energy position in the U.S. are expected to drive long-term value creation. The company's investment grade rated balance sheet with $2.9 billion of cash and securities provides a solid foundation for future growth.

3. NewsRoom

Westlake Corporation (NYSE:WLK) Receives Average Recommendation of “Hold” from Analysts

Mar -28

Source: defenseworld.net

Westlake Corporation (WLK) Presents at JPMorgan Industrials Conference 2026 Transcript

Mar -20

Source: seekingalpha.com

Westlake Chemical Partners LP Filed Annual Report

Mar -04

Source: businesswire.com

Market Today: Stocks Slide, Oil Majors Rally, Big Deals and FDA Setbacks

Mar -03

Source: gurufocus.com

Westlake: Capacity Capitulation Bottoming Out Market (Rating Downgrade)

Mar -03

Source: seekingalpha.com

First Look: Iran Shock Roils Markets; Target Beats, Amazon Buys

Mar -03

Source: gurufocus.com

Diamond Hill Mid Cap Fund Q4 2025 Portfolio Review

Mar -02

Source: seekingalpha.com

Diamond Hill Small-Mid Cap Fund Q4 2025 Portfolio Activity

Feb -27

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.84%)

6. Segments

Performance and Essential Materials

Expected Growth: 4.5%

Westlake Corporation's Performance and Essential Materials segments drove 4.5% growth, fueled by increasing demand for polyethylene and polyvinyl chloride (PVC) in construction and packaging, as well as higher sales volumes and prices in the chlor-alkali business, supported by a strong global economy and infrastructure development.

Housing and Infrastructure Products

Expected Growth: 5.5%

Westlake Corporation's Housing and Infrastructure Products segment growth of 5.5% is driven by increasing demand for polyvinyl chloride (PVC) pipes and fittings, growth in residential construction, and infrastructure development projects. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to the segment's growth.

7. Detailed Products

Petrochemicals

Westlake Corporation produces a range of petrochemicals, including ethylene, propylene, and butadiene, which are used as building blocks for various downstream products.

Vinyls

Westlake Corporation manufactures a variety of vinyl products, including PVC resin, vinyl chloride monomer, and vinyl compounds.

Olefins

Westlake Corporation produces olefins, including ethylene and propylene, which are used as feedstocks for the production of various chemicals and plastics.

Polyethylene

Westlake Corporation manufactures a range of polyethylene resins, including HDPE, LDPE, and LLDPE, which are used in various applications.

Polypropylene

Westlake Corporation produces polypropylene resins, which are used in various applications, including packaging, automotive, and construction.

Chlor-Alkali

Westlake Corporation produces chlorine, caustic soda, and other chlor-alkali products, which are used in various industries.

8. Westlake Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Westlake Corporation's threat of substitutes is moderate due to the availability of alternative energy sources and the increasing adoption of electric vehicles.

Bargaining Power Of Customers

Westlake Corporation's customers have limited bargaining power due to the company's strong brand reputation and diversified product offerings.

Bargaining Power Of Suppliers

Westlake Corporation's suppliers have moderate bargaining power due to the company's dependence on a few key suppliers for raw materials.

Threat Of New Entrants

The threat of new entrants in the energy industry is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in the energy industry is high due to the presence of several established players and the ongoing competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	32.39%
Debt Cost	4.51%
Equity Weight	67.61%
Equity Cost	10.42%
WACC	8.51%
Leverage	47.91%

11. Quality Control: Westlake Corporation passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Balchem

A-Score: 4.9/10

Value: 1.9

Growth: 5.4

Quality: 7.5

Yield: 1.0

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

Element Solutions

A-Score: 4.8/10

Value: 3.6

Growth: 6.2

Quality: 6.0

Yield: 2.0

Momentum: 4.5

Volatility: 6.7

1-Year Total Return ->

H.B. Fuller

A-Score: 4.6/10

Value: 4.9

Growth: 4.9

Quality: 4.4

Yield: 3.0

Momentum: 2.5

Volatility: 7.7

1-Year Total Return ->

Minerals Technologies

A-Score: 4.2/10

Value: 6.6

Growth: 4.3

Quality: 3.4

Yield: 1.0

Momentum: 2.5

Volatility: 7.3

1-Year Total Return ->

Olin

A-Score: 4.1/10

Value: 7.1

Growth: 4.3

Quality: 2.4

Yield: 6.0

Momentum: 1.0

Volatility: 3.7

1-Year Total Return ->

Westlake

A-Score: 4.1/10

Value: 7.7

Growth: 4.0

Quality: 3.3

Yield: 4.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

35.16%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.51%

Westlake Corporation - US9604131022

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WLK

1.c. Company Highlights

Less Volatile

Fairly Valued

Stable Momentum

Earnings Beats

Revenues Beats

Average Growth

Higher Growth

Earnings Miss

Revenues Miss

Expensive

Weak Momentum

Average Quality

Medium Volatility

Average Yield

Cheaper

Lower Quality

2. Westlake Corporation's 2025 Earnings Report: A Review of Financial Performance and Future Outlook

Segment Performance

Outlook and Guidance

Valuation Metrics

Operational Highlights

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.84%)

6. Segments

Performance and Essential Materials

Expected Growth: 4.5%

Housing and Infrastructure Products

Expected Growth: 5.5%

7. Detailed Products

Petrochemicals

Vinyls

Olefins

Polyethylene

Polypropylene

Chlor-Alkali

8. Westlake Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Westlake Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

116.06$

Current Price

116.06$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA