Westlake Corporation Just Beat EPS By 23%: Here's What Analysts Think Will Happen Next

It's been a good week for Westlake Corporation (NYSE:WLK) shareholders, because the company has just released its latest second-quarter results, and the shares gained 9.4% to US$146. It looks like a credible result overall - although revenues of US$3.2b were what the analysts expected, Westlake surprised by delivering a (statutory) profit of US$2.40 per share, an impressive 23% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Westlake after the latest results.

Check out our latest analysis for Westlake

Taking into account the latest results, the current consensus from Westlake's 13 analysts is for revenues of US$12.4b in 2024. This would reflect a credible 2.7% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 272% to US$7.90. Before this earnings report, the analysts had been forecasting revenues of US$12.5b and earnings per share (EPS) of US$6.79 in 2024. Although the revenue estimates have not really changed, we can see there's been a solid gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at US$160, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Westlake analyst has a price target of US$185 per share, while the most pessimistic values it at US$123. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Westlake's revenue growth is expected to slow, with the forecast 5.4% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Compare this to the 123 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.8% per year. Factoring in the forecast slowdown in growth, it looks like Westlake is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Westlake following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$160, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Westlake. Long-term earnings power is much more important than next year's profits. We have forecasts for Westlake going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Westlake you should know about.

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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.