It has been about a month since the last earnings report for Westlake Chemical (WLK Quick QuoteWLK - Free Report) . Shares have added about 6.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Westlake due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Westlake's Earnings and Revenues Beat Estimates in Q1

Westlake reported a profit of $174 million or $1.34 per share in first-quarter 2024, down from $394 million or $3.05 per share in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.09.

Sales fell around 11.3% year over year to $2,975 million in the quarter. The top line beat the Zacks Consensus Estimate of $2,946.1 million.

Segment Highlights

The Performance and Essential Materials segment registered a 17.8% fall in sales compared with the previous year’s levels, bringing in $1,931 million in the recent quarter. This figure fell short of our projected estimate of $2,001 million. The segment's operating income was $22 million, down from the $403 million recorded in first-quarter 2023. The downside was primarily due to a reduction in average sales prices for several key products, notably caustic soda and epoxy resin. Despite lower average sales prices, the impact was partially mitigated by an increase in sales volume during the quarter.

The Housing and Infrastructure Products segment achieved sales of $1,044 million, up 3.7% year over year. This figure surpassed our estimate of $924.7 million. The segment's operating income was $210 million, up $67 million from first-quarter 2023 levels. The uptick was driven by an increase in sales volume, especially for pipe and fittings, as well as reduced material costs.

Financial Position

In the first quarter of 2024, net cash produced by operating activities was $169 million. Cash and cash equivalents totaled $3,108 million as of Mar 31, 2024, with long-term debt of $4,590 million. Capital expenditures totaled $272 million. Free cash flow was $291 million in the quarter.

Outlook

The company sees continued growth for the Housing and Infrastructure Products segment despite high inflation and interest rates. This is primarily owing to a limited supply of houses and favorable demographics that support sustained housing demand.

In the Performance and Essential Materials segment, near-term performance is expected to remain relatively stable. However, growth in this segment could be limited by weak end-market demand and low-priced imports from Asia in some product categories and regions.

While the company is waiting for broader economic conditions to improve, it is taking steps to boost profitability in its European operations by implementing structural cost reductions. Additionally, it is investing in projects to enhance the reliability and efficiency of its plants.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Westlake has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Westlake has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.