Is It Too Late To Consider Westlake (WLK) After Its Strong Recent Share Price Run?

Simply Wall St

Wed, February 25, 2026 at 12:19 PM GMT+9 5 min read

In this article:

WLK

+11.99%

Find your next quality investment with Simply Wall St’s easy and powerful screener, trusted by over 7 million individual investors worldwide.

If you are wondering whether Westlake shares offer good value right now, you are not alone. The answer is less straightforward than a quick glance at the share price might suggest.

The stock recently closed at US$104.17, with returns of 6.5% over 7 days, 22.2% over 30 days and 40.5% year to date. The 1 year and 3 year returns sit at a 4.6% decline and 7.9% decline respectively, and the 5 year return is 30.2%.

Recent coverage has focused on Westlake in the context of broader materials sector sentiment and ongoing interest in companies with exposure to construction and industrial demand. This backdrop helps explain why the stock's shorter term moves look different to its weaker 1 year and 3 year return profile.

Our valuation framework currently gives Westlake a score of 1 out of 6, which suggests only one of the six checks points to the shares being undervalued. Next we will compare several valuation approaches and then finish with a more complete way to think about what Westlake might be worth.

Westlake scores just 1/6 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 might be worth by projecting its future cash flows and then discounting them back to today using an assumed required return for shareholders.

For Westlake, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is a loss of about US$295.5 million, so the starting point is weak rather than strongly cash generative. The model then applies a series of projected free cash flows out to 2035, including analyst inputs where available and estimates beyond that. For example, projected free cash flow in 2028 is US$491 million, with other years in the forecast period also sitting in the hundreds of millions.

Pulling all of those discounted cash flows together, the DCF model arrives at an estimated intrinsic value of about US$88.80 per share. Compared with the recent share price of US$104.17, this suggests Westlake trades at roughly a 17.3% premium to the DCF estimate, so on this measure the stock screens as overvalued.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Westlake may be overvalued by 17.3%. Discover 51 high quality undervalued stocks or create your own screener to find better value opportunities.

Story Continues  

WLK Discounted Cash Flow as at Feb 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Westlake.

Approach 2: Westlake Price vs Sales

For Westlake, the preferred yardstick is the P/S ratio, which can be useful when you want to compare what investors are paying for each dollar of revenue, especially for companies where earnings can be volatile.

In simple terms, higher growth expectations and lower perceived risk usually justify a higher “normal” or “fair” multiple, while slower growth or higher risk tend to lead to a lower one. That same logic applies whether you are talking about P/E, P/S or P/B.

Westlake currently trades at a P/S of 1.16x. This sits close to the Chemicals industry average P/S of 1.18x and above the peer group average of 0.67x. Simply Wall St also calculates a proprietary “Fair Ratio” for Westlake of 0.89x, which is the P/S level implied by factors such as its earnings growth profile, profit margins, industry, market cap and risk characteristics.

This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for Westlake specific fundamentals rather than assuming all companies in the sector deserve the same multiple. Comparing 1.16x to the 0.89x Fair Ratio suggests the shares screen as overvalued on this metric.

Result: OVERVALUED

NYSE:WLK P/S Ratio as at Feb 2026

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 22 top founder-led companies.

Upgrade Your Decision Making: Choose your Westlake Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simple stories you create about Westlake that link your view of its future revenues, earnings and margins to a forecast and then to a fair value. On Simply Wall St’s Community page you can use these Narratives to compare that fair value to the current share price, see how other investors interpret the same information, and watch those views update automatically as new news or earnings on things like plant closures, charges or analyst price targets come through. One investor might build a more optimistic Westlake Narrative around the higher US$100 price target, and another might anchor to the lower US$73 view. You can see both side by side to decide what feels reasonable for you.

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

NYSE:WLK 1-Year Stock Price Chart

_ 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._

Companies discussed in this article include WLK.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

Terms and Privacy Policy

Privacy Dashboard

More Info