$Westlake (WLK.US)$Revenue has declined in the past 5 years ...

In the first three quarters of 2022, revenue increased 51%, operating profit increased 42%, and net profit increased 47% to reach $2 billion.

Currently, the price-earnings ratio is 8, and the price-earnings ratio has dropped to 6.1. If net profit reaches 2.5 billion in 2022, the 5-year average net profit is 1.3 billion, and the corresponding price-earnings ratio is 12. If you look at it as a growth stock, the valuation discount is huge; if you look at it as a cyclical stock, the current valuation is too high.

Over the past 5 years, the balance ratio fluctuated from 55.5% to 53.8%, and fell to 50% in Q3 2022.

Interest expenses for the first three quarters of 2022 accounted for 4.9% of operating profit, which is not a heavy burden.

The ratio and growth rate of accounts receivable and inventory were normal in 2021. The increase accelerated in the first 3 quarters of 2022, but the ratio was still quite normal.

Goodwill and other intangible assets increased from $1,695 billion to $3.64 billion in 2021. Large-scale mergers and acquisitions were carried out that year. This may explain the recent surge in revenue and profit. It is questionable whether the growth brought about by mergers and acquisitions is sustainable, but the scale is likely to have increased.

Long-term loans have continued to increase to 5.3 billion dollars in the past 5 years, accounting for 52% of net assets of 10.2 billion yuan. The leverage ratio is not too high.

Over the past five years, net operating volume has accumulated at $7.94 billion, net investment of $7.08 billion, and there is a small shareholders' surplus.

Overall, Westlake has expanded its scale and increased its gross profit margin through mergers and acquisitions. This increase should not be a sector effect. Currently, the price-earnings ratio is TTM6.1, so you can choose carefully (⭐️)