Zacks Investment Research downgraded Westlake Chemical Partners LP WLKP to a Zacks Rank #5 (Strong Sell) on Dec 23, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.
Why the Downgrade?
Westlake Chemical Partners failed to create a positive stir in the market since the beginning of 2015, as evident from a negative year-to-date fall of 24.6% in the stock price. Also, the firm’s weak financial performance in the last four quarters led to an average negative earnings surprise of 7.12%. Last quarter, the company’s net income of 37 cents per limited partner unit lagged the Zacks Consensus Estimate of 42 cents.
The top-line performance was weak as revenues fell 36.6% year over year due to sales decline in Westlake Chemical Corporation and lower revenue generation from co-product, ethylene and other sales to third parties. Gross margin came in at 37.9% versus 42.1% in the year-ago quarter.
Disappointing results have weakened investors’ confidence in Westlake Chemical Partners. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 3.2% to $1.49 per limited partner unit for 2015 and 7.5% to $1.85 per limited partner unit for 2016.
Stocks to Consider
Presently, Westlake Chemical Partners has a market capitalization of $560 million. Better-ranked stocks in the chemical-specialty industry include KMG Chemicals Inc. KMG, Chemtura Corporation CHMT and Flexible Solutions International Inc. FSI. While KMG Chemicals sports a Zacks Rank #1 (Strong Buy), both Chemtura Corporation and Flexible Solutions International carry a Zacks Rank #2 (Buy).
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