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what it is
Westlake makes basic chemicals and building products that end up in your pipes, siding, packaging, cars, and hospitals.
how it gets paid
Last year Westlake made $11.2B in revenue. Basic materials was the main engine at $3.90B, or 35% of sales.
why growth slowed
Revenue fell 8.0% last year. The top line, which likely fell about 9% last year, ought to recover at a low-single-digit clip in 2026.
what just happened
Revenue of $8.6B, but earnings still missed and margins stayed thin.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
25/100 earnings predictability — expect surprises
48.2x trailing p/e — you're paying up for this one
2.3% dividend yield — cash in your pocket every quarter
6.5% return on capital — nothing to write home about
xvary composite: 43/100 — below average
What they do
Westlake makes basic chemicals and building products that end up in your pipes, siding, packaging, cars, and hospitals.
Integrated → it makes basic chemicals and many finished building products itself → so what: you keep more of the economics inside one company. Westlake did $11.2 billion of revenue in 2024 across two big engines, with 64% from Performance & Essential Materials and 36% from Housing & Infrastructure. If one market cools, your whole business is not riding on a single pipe order.
How they make money
$11.2B
annual revenue · their business grew -8.0% last year
Basic materials
$3.90B
Packaging materials
$1.70B
Automotive and healthcare materials
$1.57B
Residential construction products
$2.80B
Water treatment and coatings products
$1.23B
The products that matter
integrated materials manufacturing
Chemical and Building Materials Portfolio
$11.2B revenue
this page only gives you the combined business, not a clean segment split. what we do know: the company generated $11.2B in revenue and that figure fell 8.0% last year, which tells you the cycle mattered more than product mix.
2.3% net margin
housing and construction exposure
Building Products Demand
recovery-sensitive
management commentary on this page points you to housing and construction as core demand drivers. if those markets improve, a business coming off an 8.0% revenue decline gets operating leverage back fast.
rebound case
automotive and industrial demand
Industrial End Markets
cyclical exposure
you are not buying a precision-growth story here. you are buying sensitivity to industrial demand after a quarter that posted $2.8B in revenue, a -27.6% net margin, and a -$6.06 EPS result.
cycle, not moat
Key numbers
14.1%
operating margin
Operating margin → what is left after running the business → so what: Westlake is selling a lot and keeping too little.
48.2x
trailing p/e
P/E → price divided by earnings → so what: you are paying a premium multiple for a company coming off a loss cycle.
$3.9B
long-term debt
Debt → money the company owes → so what: downturns feel worse when fixed obligations stay put.
2.3%
dividend yield
Dividend yield → cash paid to you each year as a share of price → so what: you get paid to wait, but not enough to ignore the cycle.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 50 / 100
- long-term debt $3.9B (24% of capital)
- net profit margin 7.3% — keeps 7 cents of every dollar in revenue
- return on equity 8% — $0.08 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in WLK 3 years ago → it's now worth $8,450.
The index would have given you $13,880.
source: institutional data · total return
What just happened
missed estimates
Revenue of $8.6B, but earnings still missed and margins stayed thin.
Consensus showed last earnings at -$0.29 versus a -$0.12 estimate. Filing data also showed gross margin at 8.4%, which is too low for a clean recovery story.
$8.6B
revenue
-$7.48
eps
8.4%
gross margin
the number that mattered
Gross margin at 8.4% matters most because thin product spreads can erase the benefit of any sales rebound.
-
westlake ought to rebound this year.the company likely registered a steep loss for 2025. (management was preparing full-year results as we went to press with this report.) hefty restructuring charges associated with asset shutdowns in the performance and essential materials (pem) segment, and a large non-cash goodwill impairment associated with the north american chlorovinyl’s business weighed heavily on the bottom line. softer global industrial and manufacturing activity and other difficult business conditions also contributed to the deficit. and even though westlake’s housing and infrastructure (hip) business fared somewhat better, the slowdown in north american construction also hurt year-to-year comparisons. looking ahead, we expect the company will linger in the red during the first half of the year, but should return to profitability by the back half, and will ultimately close 2026 in the black.
-
the top line, which likely fell about 9% last year, ought to recover at a low-single-digit clip in 2026.
-
we are introducing our 2027 estimates.
-
profits may well double vs. prior year, coming in at $2.00 a share.
-
even so, the bottom line will probably pale in comparison to prior-year showings.
source: company earnings report, 2026
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What could go wrong
the #1 risk is a slower housing and construction recovery after an 8.0% revenue decline.
med
end-market demand stays weak
Westlake is tied to housing, construction, auto, and industrial demand. If those markets stay soft, a business that already saw revenue fall 8.0% does not have much margin cushion.
with only a 2.3% net margin, a modest demand shortfall can erase a large share of profit.
med
restructuring damage is not actually one-time
The latest quarter posted -$6.06 EPS and a -27.6% net margin. If shutdowns and restructuring charges keep showing up, the market stops treating them as cleanup and starts treating them as the business.
another quarter like that would make the FY2026 recovery setup look too optimistic.
med
balance sheet is fine, earnings quality is not
$3.9B in long-term debt and a B++ balance sheet are manageable. The bigger issue is that return on capital is just 2.0% and return on equity is 3%, which leaves little evidence of durable pricing power.
if returns stay this low, the stock can remain a value trap even if headline earnings bounce.
a company with $11.2B in revenue sounds large. a company keeping only 2 cents of each revenue dollar is still fragile. That is the combined risk picture.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
net margin off the floor
the latest quarter printed a -27.6% net margin after a full-year 2.3% margin. you want to see that gap close fast.
trend
revenue finally turning positive
after an 8.0% annual sales decline, even low-single-digit growth would support the rebound story. another down year would not.
risk
restructuring staying in the numbers
if charges and shutdown costs keep driving outsized losses, the market will stop calling them temporary.
calendar
institutional flow on the next filing cycle
institutions were net sellers for two straight quarters. you want to see whether that reverses as 2027 estimates start to fill in.
Analyst rankings
short-term outlook
bottom 5%
momentum score 5. in human-speak, analysts think this stock has one of the weakest near-term setups in the market.
risk profile
average
stability score 3 — this is not a bunker stock, but it is not a balance-sheet emergency either.
chart momentum
bottom 5%
technical score 5 — the tape still looks weak, which is what you expect after a bad earnings profile.
earnings predictability
25 / 100
earnings can swing hard here. translated: if you own WLK, expect the cycle to make forecasting look foolish on a regular basis.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 153 buyers vs. 155 sellers in 3q2025. total institutional holdings: 42.6M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$67
$157
$96
current price
$112
target midpoint · +16% from current · 3-5yr high: $135 (+40% · 11% ann'l return)
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