Financial Comparison: Eastman Chemical (EMN) & Westlake Chemical Partners (WLKP)

Westlake Chemical Partners (NYSE: WLKP) and Eastman Chemical (NYSE:EMN) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Institutional and Insider Ownership

79.0% of Westlake Chemical Partners shares are held by institutional investors. Comparatively, 88.7% of Eastman Chemical shares are held by institutional investors. 1.1% of Eastman Chemical shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Westlake Chemical Partners pays an annual dividend of $1.42 per share and has a dividend yield of 5.8%. Eastman Chemical pays an annual dividend of $2.04 per share and has a dividend yield of 2.5%. Westlake Chemical Partners pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eastman Chemical pays out 32.3% of its earnings in the form of a dividend. Westlake Chemical Partners has increased its dividend for 5 consecutive years and Eastman Chemical has increased its dividend for 2 consecutive years. Westlake Chemical Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Westlake Chemical Partners has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Profitability

This table compares Westlake Chemical Partners and Eastman Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westlake Chemical Partners 3.60% 4.34% 2.54%
Eastman Chemical 10.11% 22.54% 6.74%

Analyst Ratings

This is a breakdown of current ratings and target prices for Westlake Chemical Partners and Eastman Chemical, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westlake Chemical Partners 0 0 2 0 3.00
Eastman Chemical 0 4 5 0 2.56

Westlake Chemical Partners currently has a consensus target price of $26.50, indicating a potential upside of 9.05%. Eastman Chemical has a consensus target price of $88.57, indicating a potential upside of 6.44%. Given Westlake Chemical Partners’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Westlake Chemical Partners is more favorable than Eastman Chemical.

Earnings and Valuation

This table compares Westlake Chemical Partners and Eastman Chemical’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Westlake Chemical Partners $1.09 billion 0.60 $456.12 million $1.42 17.11
Eastman Chemical $9.20 billion 1.31 $2.15 billion $6.32 13.17

Eastman Chemical has higher revenue and earnings than Westlake Chemical Partners. Eastman Chemical is trading at a lower price-to-earnings ratio than Westlake Chemical Partners, indicating that it is currently the more affordable of the two stocks.

Summary

Eastman Chemical beats Westlake Chemical Partners on 12 of the 17 factors compared between the two stocks.

About Westlake Chemical Partners

Westlake Chemical Partners LP is a limited partnership formed by Westlake Chemical Corporation (Westlake). The Company operates, acquires and develops ethylene production facilities and other assets. Its business and operations are conducted through Westlake Chemical OpCo LP (OpCo). OpCo sells ethylene to Westlake and others, as well as sells co-products of ethylene production, including propylene, crude butadiene, pyrolysis gasoline and hydrogen. As of December 31, 2016, OpCo’s assets included three ethylene production facilities, which primarily convert ethane into ethylene, and a 200-mile ethylene pipeline. As of December 31, 2016, OpCo owned two ethylene production facilities at Westlake’s Lake Charles, Louisiana site (Petro 1 and Petro 2, collectively Lake Charles Olefins), and one ethylene production facility at Westlake’s Calvert City, Kentucky site (Calvert City Olefins), with an annual capacity of approximately 630 million pounds.

About Eastman Chemical

Eastman Chemical Company (Eastman) is an advanced materials and specialty additives company. The Company’s segments include Additives & Functional Products (AFP), Advanced Materials (AM), Chemical Intermediates (CI), and Fibers. In the AFP segment, it manufactures chemicals for products in the coatings, tires, consumables, building and construction, industrial applications, including solar energy markets, animal nutrition, care chemicals, crop protection, and energy markets. In the AM segment, it produces and markets its polymers, films, and plastics with differentiated performance properties for end uses in transportation, consumables, building and construction, durable goods, and health and wellness products. The CI segment leverages large scale and vertical integration from the cellulose and acetyl, olefins, and alkylamines streams to support its specialty operating segments. Its product lines in Fibers segment include Acetate Tow, Acetate Yarn and Acetyl Chemical Products.

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