Value
6.7/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.8 |
| EV/EBITDA | 0.2 |
| Fwd P/E | 5.9 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 21.8x
- ▸PEG: 0.17
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.
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VerdictSELL
Overall score5.0/10
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. | Tripped↑Improving |
| 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. | ↓Deteriorating |
| 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. | ↑Improving |
| 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. | ↑Improving |
| 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.
Tripped↑ImprovingSentiment 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.
↓DeterioratingWarnings
- 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.
↑ImprovingEarnings
- 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.
↑ImprovingOptions
- 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
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 1.5 |
| Volume | 4.2 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 7.3 |
| Price target | 8.6 |
- ▸Analyst upside: 30%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.5 |
| quality rank | 0.6 |
| growth rank | 0.0 |
Technical
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.2 |
| support resistance | 7.0 |
| 52w position | 2.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.9 |
| days to cover | 6.4 |
| volatility | 5.0 |
| put call | 6.7 |
| implied vol | 2.9 |
| beta | 9.3 |
| debt equity | 6.8 |
| news risk | 6.0 |
- ▸High short interest justified: 16%
- ▸High IV: 62%
Catalyst
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 4.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.3 |
| news activity | 5.0 |
- ▸Earnings concerns: 1B/3M
- ▸Earnings in 9 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (4)
- ASYMMETRY:2.9>=1.5
- INSIDER:OK
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.2<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (2)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:9d<=14d (soft)
Reward-to-Risk
2.85
Upside
+17.0%
Downside
6.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 46
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -40% (>40% off 52w high)
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 4.2<4.5 outcome against Sentiment at 7.4 and asymmetric R:R of 2.85.
The strongest dimensions are Sentiment at 7.4, Insider at 7.3, and Value at 6.7; the weakest are Quality at 1.8, Catalyst at 3.2, and Peer rank at 3.3. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 2.85 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Quality Floor Failure
Trip ifQuality score remains below 3.0 for more than 3 consecutive quarters, confirming structural weakness.
- P2Earnings Miss Pattern
Trip ifEPS surprise falls below -50% in any 1 of the next 4 quarters, signaling continued severe miss pattern.
- P3Analyst Sentiment Price GapTripped
Trip ifAnalyst price target falls below $90, reducing upside to less than 5% from current levels near $87.45.
- P4Elevated Options Bearish Positioning
Trip ifPut-to-call ratio rises above 5.0, indicating options bearish positioning has intensified beyond current elevated levels.