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Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.
Westlake Chemical Corp. makes petrochemicals, plastics and building products. Its products include a range of chemicals used in the world, which are fundamental to many diverse consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, residential and commercial construction, as well as other durable and non-durable goods. It has a market cap of $6.8-billion (U.S.).
The company has grown earnings at a 45-per-cent pace over the long term (using an average of the 3-, 4-, and 5-year EPS growth rates), which the Peter Lynch-based model likes. P/E of 9.7 and PE-to-growth ratio of 0.22 also impress the Lynch model. Westlake also has debt/equity ratio of less than 25 per cent, which the Lynch model likes.
The Joel Greenblatt model likes the company's 17 per cent earnings yield (EBIT/enterprise value).
Westlake has 7.7% free cash flow yield. It has 24 per cent return on equity versus the 10 per cent chemicals (plastics & rubber) industry average, and 15 per cent profit margins versus 3 per cent industry average. The company recently upped dividend by 10 per cent.
The Benjamin Graham-based model likes its 4.1 current ratio and $1.6-billion in net current assets vs. $760-million in long-term debt.
John Reese is long WLK.
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