Head to Head Analysis: Westlake Chemical Partners (WLKP) and Methanex (MEOH)

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

Dividends

Westlake Chemical Partners pays an annual dividend of $1.50 per share and has a dividend yield of 6.7%. Methanex pays an annual dividend of $1.20 per share and has a dividend yield of 2.2%. Westlake Chemical Partners pays out 95.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Methanex pays out 39.9% of its earnings in the form of a dividend. Westlake Chemical Partners has raised 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.

Analyst Ratings

This is a breakdown of current recommendations for Westlake Chemical Partners and Methanex, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westlake Chemical Partners 0 0 3 0 3.00
Methanex 1 5 7 0 2.46

Westlake Chemical Partners presently has a consensus target price of $27.75, indicating a potential upside of 23.88%. Methanex has a consensus target price of $56.31, indicating a potential upside of 3.70%. Given Westlake Chemical Partners’ stronger consensus rating and higher probable upside, analysts clearly believe Westlake Chemical Partners is more favorable than Methanex.

Risk & Volatility

Westlake Chemical Partners has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Methanex has a beta of 1.82, indicating that its stock price is 82% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Westlake Chemical Partners 3.80% 4.73% 2.86%
Methanex 9.81% 16.02% 6.31%

Insider & Institutional Ownership

55.2% of Westlake Chemical Partners shares are held by institutional investors. Comparatively, 83.1% of Methanex shares are held by institutional investors. 1.0% of Methanex shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Westlake Chemical Partners and Methanex’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westlake Chemical Partners $986.74 million 0.61 $40.94 million $1.57 14.27
Methanex $2.00 billion 2.28 -$12.54 million $3.01 18.04

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

Summary

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

Westlake Chemical Partners Company Profile

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.

Methanex Company Profile

Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company’s subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

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