• If you are trying to work out whether LyondellBasell Industries' current share price reflects its underlying value, the recent moves in the stock give you plenty to think about.
• The stock closed at US$71.51, with a 4.1% decline over the past week and a 10.9% decline over the past month, yet it has returned 61.1% year to date and 36.5% over the last year.
• Recent coverage around LyondellBasell has focused on its position within the broader chemicals sector and how investors are weighing cyclical exposure against income potential. That mix of sentiment helps explain why the share price has pulled back in the short term while still keeping longer term returns in focus.
• On Simply Wall St's valuation checks, LyondellBasell scores 5 out of 6 for being undervalued. You can see the full breakdown in this valuation score, which sets up a closer look at P/E, cash flow and asset based methods before finishing with a different way to think about what "fair value" really means.

Approach 1: LyondellBasell Industries Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash that a company is expected to generate in the future and discounts it back to today using a required rate of return. The idea is to estimate what those future cash flows are worth in present terms.

For LyondellBasell Industries, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections. The latest twelve month free cash flow is about $1.06b. Analyst estimates extend out for several years, then Simply Wall St extrapolates further, with projected free cash flow of $4.02b in 2035. All cash flows are assessed in US$.

By discounting these projected cash flows back to today, the DCF model arrives at an estimated intrinsic value of US$162.56 per share. Compared with the recent share price of US$71.51, this suggests the stock is 56.0% undervalued according to this methodology.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests LyondellBasell Industries is undervalued by 56.0%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: LyondellBasell Industries Price vs Sales

For companies that generate meaningful revenue across cycles, the P/S ratio can be a useful way to compare what investors are paying for each dollar of sales, especially when earnings can be volatile or temporarily low.

What counts as a “normal” or “fair” P/S ratio often reflects how the market views a company’s growth prospects and risks. Higher expected growth and lower perceived risk usually support a higher multiple, while lower growth or higher risk tend to point to a lower multiple.

LyondellBasell Industries currently trades on a P/S ratio of 0.78x, compared with the Chemicals industry average of 1.19x and a peer average of 0.86x. Simply Wall St also calculates a proprietary “Fair Ratio” for the stock of 1.17x, which estimates the P/S multiple that might be appropriate after considering factors such as earnings growth, profit margins, industry, market cap and key risks.

This Fair Ratio can be more useful than a simple peer or industry comparison because it adjusts for company specific characteristics rather than treating all stocks as alike. Compared with the current P/S of 0.78x, the Fair Ratio of 1.17x indicates that LyondellBasell Industries is trading below that level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your LyondellBasell Industries Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so this is where Narratives come in. They let you attach a clear story about LyondellBasell Industries to the numbers you see by linking your view of its future revenue, earnings and margins to a financial forecast and then to a Fair Value that you can compare with the current share price to help decide whether to buy, hold or sell.

On Simply Wall St's Community page, Narratives are presented as easy to use setups where each investor can express a different story. One example is a Narrative that lines up with a Fair Value near US$90.00 based on higher expected growth, while another might be closer to US$38.00 and reflect more caution. These Narratives are refreshed automatically when new earnings, news or estimates come in so that your story, forecast and Fair Value stay in sync with the latest information.

For LyondellBasell Industries, however, we will make it really easy for you with previews of two leading LyondellBasell Industries Narratives:

Fair Value: US$90.00

Gap to Fair Value: about 20.5% below this narrative's estimate at the recent US$71.51 share price

Revenue Growth Assumption: 3.48% a year

• Focuses on cost cuts, portfolio streamlining and advanced recycling to lift margins and free cash flow.
• Assumes steady revenue growth and a move to higher profit margins over the next few years.
• Views tight polyethylene supply and a reset dividend as support for a higher valuation over time if execution holds.

Fair Value: US$38.00

Gap to Fair Value: about 88.4% above this narrative's estimate at the recent US$71.51 share price

Revenue Growth Assumption: 3.14% decline a year

• Emphasises pressure from sustainability rules, alternative materials and potential long term demand headwinds for traditional plastics.
• Assumes falling revenues and only modest margin improvement, with earnings seen as vulnerable to oversupply and pricing pressure.
• Argues that even with some operational strengths, the current share price leaves limited room if the cycle or regulation move against the company.

If you want to see how these narratives line up with the wider Community view and build your own version of the story around your assumptions, See what the community is saying about LyondellBasell Industries.

Do you think there's more to the story for LyondellBasell Industries? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.