_edited.png)
RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Westlake Corporation (XNYS:WLK) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
WLK
Name:
WESTLAKE CORPORATION (XNYS:WLK)
Sector:
437.00M
Industry:
Specialty Chemicals
CEO:
Mr. Albert Chao
Total Employees:
14,550
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -206.77% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF WESTLAKE CORPORATION(WLK) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY CHEMICALS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
95.76
One Month Price Target:
$96.4
Six Month Price Target :
$99.63
Likely Price in One Year's Time:
Ticker:
$103.5
Likely Trading Range Today Under (Normal Volatility)
$95.35
Price Upper limit ($) :
$96.36
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$89.76
This week:
$82.33
This month :
$68.91
Other Primary facts
Market Cap:
12.25B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
127.96M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
17.62%
-23.8%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$123.61
$110.74
$67.91
$80.78
Medium risk (<10%) entry points
Buy Call
Sell Call
$106.55
Buy Put:
Sell Put:
$103.81
$84.93
$87.71
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
WLK
Sharpe Ratio:
2.81%
Comparison:
WLK, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 32.52% higher than the industry
& ratio is 23.16% higher than the market/S&P 500 average
Average Returns/Yield of
WLK
Daily returns:
0.10%
Weekly returns:
0.48%
Monthly returns:
1.92%
Yearly returns:
24.57%
Comparison of returns:
Average annual returns/yield (last 3 years) is -6.36% below industry average
Classification:
WLK, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.89
Statistical test of Returns:
WLK has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.10%
Weekly Volatility:
6.93%
Monthly Volatility:
13.86%
Yearly Volatility:
48.02%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.85%
Volatility in last five trading days has been -72.50% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.27%
Weekly VaR:
-14.02%
Monthly VaR:
-28.04%
How Much Can the price of
WLK
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-24%
Worst case (decline):
>85%
This translates to price declining to:
$73.07
This translates to price declining to:
$14.36
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
WLK is a 97.90% riskier investment compared to the market/S&P 500 & is 69.54% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -7.79% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
WLK
Beta in relation to market/S&P 500--1.20
Expected beta in 1 year's time:
0.77
Expected beta in 3 year's time:
1.089
Unlevered (debt free) Beta:
0.838
Beta in relation to Nasdaq (XNAS):
0.87
Beta in relation to all global stocks::
0.959
Beta Comparison & Analysis
Beta of competitors/peers::
1.359
Beta is -11.52% lower than peers
Average Industry Beta:
1.164
Beta is 3.28% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
21.50%
Sustainable growth rate is -25.57% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.116
Alpha is -13.58% below industry average alpha yield
Alpha is 740% higher than market/& is unsustainably high
Analysis of Cost of Capital of
WLK
Equity cost of capital:
0.114
Equity cost of capital is 2.35% above industry mean WACC
Unlevered (without debt) cost of capital:
7.93%
Before-tax cost of debt:
3.66%
After-tax cost of debt:
2.89%
Overall debt rating:
Upper medium A grade (third highest grade),CO8<=0.0429,"Medium BBB grade (Fourth highest grade)
Weighted average cost of capital (WACC):
2.89%
WACC is 9.72% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$105.32
Revenue growth rate per share of (3Y):
1.32
Annual revenue growth rate is 2150.49% above the industry average
EPS:
$19.54
Expected Annual growth rate of EPS (3Y):
68.44%
Expected future EPS growth rate is 7449.41% higher than the Specialty Chemicals industry
Free cash flow (FCF) per share:
$15.86
Balance sheet equity growth per share: 22.36%
Equity growth rate per share is 113.86% higher than the industry
Debt per share
$38.31
EBITDA per share
$34.29
Valuation Analysis Today of
WLK
P/E Ratio:
4.33
P/E Ratio of Competitors/Peers:
11.23
P/E ratio is -61.42% lower than main peers & is -88.43% lower than the industry
Stock price/value with industry average P/E ratio: $731.95
WLK is -86.92% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $31.83
Present value of the expected future dividends only: $12.00
P/S (Price to Sales ratio):
0.91
Price to sales ratio is -67.05% below the industry mean
P/B (Price to book value ratio):
1.32
Price to free cash flow: 6.04
-
Net income growth rate (3Y):
104.86%
Net income growth rate is -289.68% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 1.54%
Dividend yeild: 1.24%
Previous Dividend: $0.30
Previous adjusted dividend: $0.30
Previous Dividend: $1.19
Expected next dividend best case: $0.31
Expected next dividend worst case: $0.28
Average dividend payment (long-term): $0.28
Average dividend increase/decrease (growth rate) % per period: 1.32%
Expected next dividend payment date: 09/05/2022
Expected next dividend record date: 22/08/2022
Expected next dividend declaration date: 08/11/2022
Previous dividend payment date: 06/07/2022
Previous dividend record date: 23/05/2022
Previous dividend declaration date: 13/05/2022
Dividend History:
2022-05-20--$0.30
2021-11-22--$0.30
2021-05-24--$0.27
2022-02-28--$0.30
2021-08-23--$0.30
2021-03-01--$0.27
Dividend growth rate is -93.57% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
56.47%
Net debt to equity ratio:
47.36%
Debt to assets ratio:
24.83%
Net debt to assets ratio:
20.82%
Debt-to-asset ratio is -54.10% below industry average
Ability to repay debt:
Interest coverage ratio:
23.22
Interest coverage ratio is 10.41% more than industry average
Looking forward:
Debt growth rate:
58.19%
Annual debt growth is -84% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.16%
Analysis of Key Statistics
Correlation of price movement with the market:
0.647
Statistical significance of correlation:
WLK has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.58
Stock price is 11.61% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.58
Correlation of price movement with Nasdaq (^IXIC):
0.03
Covariance of price movement with the market:
0.054
Kurtosis
8.766
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.491
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
WLK
Gross Profit Margin Ratio:
127%
Operating Profit Margin Ratio:
25.87%
Operating profit margin is -109.19% lower than the industry
Net Profit Margin Ratio:
127%
Effective Tax Rate:
22.93%
Effective tax rate is 27.71% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
29.13%
Return on equity (ROE) is 1.34% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
12.81%
Return on assets (ROA) is 387.83% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
2.12
Current ratio is -20.93% below industry average
Cash Conversion Cycle (days):
34.4
Cash conversion cycle is -44.19% below industry average
The remaining useful life of property plant & equipment is: 10.3 years
Stock based compensation to net income ratio:
0.32%
In-depth Efficiency Analysis
Revenue generated per employee:
926.3K
Each employee generates 24% more revenue than industry average revenue per employee
EBITDA generated per employee:
301.6K
Each employee generates 205% more EBITDA than industry average revenue per employee
Profit generated per employee:
173.8K
Each employee generates 447% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
30.0K
Each employee generates -181% less free cash flow than industry average revenue per employee
Assets/Capital per employee
985.3K
Each employee generates -181% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
WLK
ICL GROUP LTD (XNYS:ICL)
Forum Energy Metals Corp. (XTSX:FMC)
AGNICO EAGLE MINES LIMITED (XNYS:AEM)
Sociedad Quimica y Minera de Chile SA (XNYS:SQM)
Aluminum Corporation of China Limited (XNYS:ACH)
RPM INTERNATIONAL INC. (XNYS:RPM)
CLEVELAND-CLIFFS INC. (XNYS:CLF)
ALCOA CORPORATION (XNYS:AA)
CF INDUSTRIES HOLDINGS, INC. (XNYS:CF)
Current Analyst Ratings
Strong buy�13%
Buy�38%
Hold�17%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
13.48B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
9.21B
4.27B
-
-
615.00M
-
138.00M
753.00M
-
189.00M
902.00M
4.39B
3.49B
2.53B
3.35B
768.00M
2.53B
Statement of Cash Flow
Date:
Period:
257.00M
Differed Income Tax :
42.00M
Stock Based Compensation :
8.00M
Change in Working Capital :
- 378000.00K
Accounts Receivables:
- 194000.00K
Other Working Capital:
- 22000.00K
Other Non-Cash Items:
7.00M
Net Cash Provided by Operating Activities:
700.00M
Investments in PP&E:
- 263000.00K
Net Acquisitions:
- 1250000.00K
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
1.06B
-
1.06B
2.35B
1.88B
114.00M
5.41B
8.28B
-
-
-
-
6.06B
14.34B
-
19.74B
-
264.00M
-
-
2.29B
2.55B
4.90B
3.04B
7.94B
-
10.49B
-
-
-
-
March 31, 2022 at 6:00:00 AM
9.96B
8.68B
19.17B
-
5.17B
4.1B
-
6.00M
- 1507000.00K
- 8000.00K
-
-
- 39000.00K
-
- 47000.00K
- 3000.00K
- 857000.00K
1.08B
1.94B
700.00M
- 263000.00K
437.00M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
WLK
2023
2024
2025
2026
2027
$104.02
$208.34
$225.18
$243.38
$263.05