Upgrade: Analysts Just Made A Substantial Increase To Their Westlake Corporation (NYSE:WLK) Forecasts

Shareholders in Westlake Corporation (NYSE:WLK) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After the upgrade, the ten analysts covering Westlake are now predicting revenues of US$14b in 2022. If met, this would reflect a decent 18% improvement in sales compared to the last 12 months. Per-share earnings are expected to accumulate 2.8% to US$16.11. Prior to this update, the analysts had been forecasting revenues of US$13b and earnings per share (EPS) of US$14.07 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

Check out our latest analysis for Westlake

Despite these upgrades, the analysts have not made any major changes to their price target of US$123, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Westlake, with the most bullish analyst valuing it at US$140 and the most bearish at US$89.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Westlake shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Westlake's rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 7.0% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Westlake is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Westlake could be a good candidate for more research.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Westlake analysts - going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.