Earnings Miss: Westlake Corporation Missed EPS By 28% And Analysts Are Revising Their Forecasts

The full-year results for Westlake Corporation (NYSE:WLK) were released last week, making it a good time to revisit its performance. Statutory earnings per share fell badly short of expectations, coming in at US$4.64, some 28% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$12b. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Westlake

Taking into account the latest results, the current consensus from Westlake's 15 analysts is for revenues of US$12.6b in 2025. This would reflect a modest 3.5% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to soar 31% to US$6.10. Before this earnings report, the analysts had been forecasting revenues of US$12.7b and earnings per share (EPS) of US$7.22 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

The average price target fell 9.0% to US$132, with reduced earnings forecasts clearly tied to a lower valuation estimate. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Westlake, with the most bullish analyst valuing it at US$166 and the most bearish at US$110 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Westlake's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.5% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.4% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Westlake.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Westlake. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Westlake's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Westlake going out to 2027, and you can see them free on our platform here..

You can also see whether Westlake is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.