Value
7.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.7 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.5 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 19.7x
- ▸PEG: 0.15
- ▸Attractively valued
WLK · Why this verdict
Why Westlake (WLK) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Westlake Corporation trades at an attractive valuation relative to peers but carries serious quality concerns, having missed earnings estimates in 3 of the last 4 quarters and generating negative free cash flow, making this a speculative recovery play rather than a high-conviction holding.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Analysts maintain a roughly 30% upside price target relative to current levels near $87.45, and hold a moderately constructive rating, suggesting Wall Street sees recovery potential even as fundamentals remain weak. Sentiment breakdown | The stock price rises above $98 over 12 months as sector conditions improve and analysts' targets are approached. | →Stable |
| CounterHigh put-to-call ratio of 3.37 and elevated implied volatility of 72% indicate options market participants are significantly more bearish than sell-side analysts. | ||
Westlake's business quality score of 1.8 out of 10 is below the minimum threshold considered acceptable, driven by near-zero margins, negative free cash flow as a percentage of revenue, and a weak competitive moat assessment. Warnings | Quality metrics improve over 12 months, with the quality score rising above 4.0 as margins recover in the specialty chemicals cycle. | →Stable |
| CounterSpecialty chemicals businesses often experience prolonged margin compression during demand troughs; a quality score of 1.8 may persist for multiple quarters without a significant demand recovery. | ||
Westlake has missed analyst earnings estimates in 3 of the last 4 quarters with an average surprise of negative 226%, suggesting the company is consistently failing to meet financial expectations. Earnings | Earnings delivery improves over 12 months, with at least 3 of the next 4 quarters showing positive or breakeven surprise results. | →Stable |
| CounterThe one beat quarter in February 2026 shows earnings can occasionally land above estimates, and analysts may be resetting expectations low enough to allow positive surprises going forward. | ||
The put-to-call ratio of 3.37 is nearly 3.5 times the neutral level, indicating that options market participants are positioning heavily for downside, which adds a meaningful sentiment headwind beyond the fundamental challenges. Options | The put-to-call ratio falls below 1.5 over the next 12 months as sentiment stabilizes and bears cover their positions. | →Stable |
| CounterHigh put ratios sometimes represent hedging by institutional holders rather than pure directional bets, and may unwind quickly on any positive earnings surprise. | ||
Analysts maintain a roughly 30% upside price target relative to current levels near $87.45, and hold a moderately constructive rating, suggesting Wall Street sees recovery potential even as fundamentals remain weak.
→StableSentiment breakdown
- Expectation
- The stock price rises above $98 over 12 months as sector conditions improve and analysts' targets are approached.
CounterHigh put-to-call ratio of 3.37 and elevated implied volatility of 72% indicate options market participants are significantly more bearish than sell-side analysts.
Westlake's business quality score of 1.8 out of 10 is below the minimum threshold considered acceptable, driven by near-zero margins, negative free cash flow as a percentage of revenue, and a weak competitive moat assessment.
→StableWarnings
- Expectation
- Quality metrics improve over 12 months, with the quality score rising above 4.0 as margins recover in the specialty chemicals cycle.
CounterSpecialty chemicals businesses often experience prolonged margin compression during demand troughs; a quality score of 1.8 may persist for multiple quarters without a significant demand recovery.
Westlake has missed analyst earnings estimates in 3 of the last 4 quarters with an average surprise of negative 226%, suggesting the company is consistently failing to meet financial expectations.
→StableEarnings
- Expectation
- Earnings delivery improves over 12 months, with at least 3 of the next 4 quarters showing positive or breakeven surprise results.
CounterThe one beat quarter in February 2026 shows earnings can occasionally land above estimates, and analysts may be resetting expectations low enough to allow positive surprises going forward.
The put-to-call ratio of 3.37 is nearly 3.5 times the neutral level, indicating that options market participants are positioning heavily for downside, which adds a meaningful sentiment headwind beyond the fundamental challenges.
→StableOptions
- Expectation
- The put-to-call ratio falls below 1.5 over the next 12 months as sentiment stabilizes and bears cover their positions.
CounterHigh put ratios sometimes represent hedging by institutional holders rather than pure directional bets, and may unwind quickly on any positive earnings surprise.
Per-dimension breakdown
Quality
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 0.0 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 7.5 |
| FCF quality | 0.0 |
| Moat | 3.2 |
| Piotroski F | 5.6 |
- ▸Cash-burning: FCF -0% of revenue
- ▸No competitive moat
- ▸Quality concerns
Growth
5.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.8 |
| EPS growth | 10.0 |
- ▸Declining revenue: -7%
Momentum
1.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Capitulation risk (RSI 22, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.7%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.5 |
| Analyst rating | 7.3 |
| Price target | 9.5 |
- ▸Analyst upside: 50%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $2,308,037 (0.024% of mkt cap)
Peer rank
2.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.3 |
| quality rank | 0.6 |
| growth rank | 0.0 |
Technical
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.9 |
| 52w position | 2.2 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.3 |
| days to cover | 7.7 |
| volatility | 3.3 |
| put call | 2.9 |
| implied vol | 3.7 |
| beta | 9.5 |
| debt equity | 6.8 |
- ▸Elevated put/call: 1.56
Catalyst
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 6.0 |
| news activity | 5.0 |
- ▸Earnings concerns: 1B/3M
- ▸Dividend: 279.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- ASYMMETRY:4.8>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:39d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.2<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
4.79
Upside
+35.2%
Downside
7.3%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.2<4.5.
The strongest dimensions are Value at 7.0, Technical at 7.0, and Sentiment at 6.7; the weakest are Momentum at 1.2, Quality at 1.8, and Peer rank at 2.2. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 4.79 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Westlake's business quality score of 1.8 out of 10 is below the minimum threshold considered acceptable, driven by near-zero margins, negative free cash flow as a percentage of revenue, and a weak competitive moat assessment.
Trip ifQuality score remains below 3.0 for more than 3 consecutive quarters, confirming structural weakness.
- P2Westlake has missed analyst earnings estimates in 3 of the last 4 quarters with an average surprise of negative 226%, suggesting the company is consistently failing to meet financial expectations.
Trip ifEPS surprise falls below -50% in any 1 of the next 4 quarters, signaling continued severe miss pattern.
- P3Analysts maintain a roughly 30% upside price target relative to current levels near $87.45, and hold a moderately constructive rating, suggesting Wall Street sees recovery potential even as fundamentals remain weak.
Trip ifAnalyst price target falls below $90, reducing upside to less than 5% from current levels near $87.45.
- P4The put-to-call ratio of 3.37 is nearly 3.5 times the neutral level, indicating that options market participants are positioning heavily for downside, which adds a meaningful sentiment headwind beyond the fundamental challenges.
Trip ifPut-to-call ratio rises above 5.0, indicating options bearish positioning has intensified beyond current elevated levels.