• If you are wondering whether Westlake is offering fair value at its current share price, you are not alone. This article is designed to help you weigh that up in a clear, structured way.
• The stock last closed at US$99.12, with recent returns of 9.0% over 7 days, 19.1% over 30 days, 33.7% year to date, and a 9.5% decline over 1 year alongside a 15.7% decline over 3 years and a 21.8% gain over 5 years.
• Recent share price moves sit against a backdrop of ongoing interest in materials and chemicals producers, where investors regularly reassess how cyclical demand, costs and long term capital investment plans might influence company values. For Westlake, this kind of context often shapes how the market weighs its future cash flows against current pricing. This is exactly what valuation methods aim to capture.
• Westlake currently has a valuation score of 2 out of 6, reflecting how many checks suggest the stock may be undervalued. We will look at what different valuation approaches say about that score before finishing with a broader way to think about valuation beyond the numbers alone.

Westlake scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Westlake Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting them back to what they might be worth in today's dollars.

For Westlake, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections expressed in US$. The latest twelve month free cash flow is a loss of about $295.47 million. Looking ahead, analyst inputs and extrapolated estimates suggest free cash flow of $211.17 million in 2026 and $491.00 million by 2028, with further projections running out to 2035. Simply Wall St extrapolates beyond the analyst horizon; figures after 5 years are model based rather than direct analyst estimates.

Bringing all those projected cash flows back to today gives an estimated intrinsic value of about $105.41 per share. Against a recent share price of $99.12, the DCF implies the stock is around 6.0% undervalued, which is a relatively small gap.

Result: ABOUT RIGHT

Westlake is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Westlake Price vs Sales

For companies where earnings can be affected by factors like depreciation or temporary margin pressure, the P/S ratio is often a practical way to compare what investors are paying for each dollar of revenue.

What counts as a reasonable P/S multiple usually reflects how investors view the balance between growth potential and risk. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher uncertainty can point to a lower one.

Westlake currently trades on a P/S of 1.11x. That sits close to the Chemicals industry average of 1.17x and above the peer group average of 0.66x. Simply Wall St also calculates a Fair Ratio of 0.89x for Westlake. This is the P/S level it might expect based on factors such as growth outlook, profit margins, industry, market cap and risk profile.

This Fair Ratio can be more tailored than a simple comparison with peers or the broad industry. It tries to reflect Westlake’s own characteristics rather than assuming all chemical companies should trade on the same multiple. Against this Fair Ratio, the current 1.11x P/S suggests investors are paying a higher price for each dollar of sales than that model implies.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Westlake Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can use Narratives, where you set out your story for Westlake, link that story to your own forecasts for revenue, earnings and margins, turn those into a Fair Value, and then compare that Fair Value with the current price to help decide whether the stock looks attractive or not. The platform updates Narratives as new information comes through, such as plant closure news or analyst targets between about US$73 and US$100, so you can see how different investors, including those closer to the lower end and those closer to the upper end of that range, interpret the same company in different ways.

Do you think there's more to the story for Westlake? 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.