Westlake Chemical Partners LP (WLKP): Deep Value Chemical-Related Business
Thursday, April 16, 2026 · Johnny Hopkins
As part of our ongoing series at The Acquirer’s Multiple, each week we highlight a stock from our Stock Screeners that may represent an undervalued opportunity hiding in plain sight.
This week’s spotlight is Westlake Chemical Partners LP (WLKP) — a master limited partnership that operates ethylene production facilities and sells output primarily to its parent, Westlake Corporation.
Despite stable cash flows, long-term contractual arrangements, and consistent distributions, WLKP currently trades at valuation levels that may suggest the market is underappreciating its defensive, income-generating profile.
Business Overview
Westlake Chemical Partners operates a fee-based ethylene production business.
Core components of the business include:
✓ Ethylene production facilities
✓ Long-term sales agreement with parent (Westlake Corp)
✓ Petrochemical feedstock processing
✓ Cost-plus pricing structure
✓ Stable, contract-driven revenue model
The partnership benefits from predictable cash flows due to its contractual structure, which reduces exposure to commodity price volatility compared to typical chemical producers.
What Is IV/P (Intrinsic Value to Price)?
IV/P compares a conservative intrinsic valuation to the current market price.
IV/P > 1 → Undervalued
IV/P < 1 → Overvalued
WLKP’s IV/P = 1.80, suggesting the stock may be trading at a significant discount to conservative intrinsic value estimates.
Supporting Metrics
Revenue (TTM): ≈ $1.17B
Gross Profit: ≈ $348M
Operating Income: ≈ $320M
Net Income: ≈ $48.7M
Free Cash Flow (TTM): ≈ $200M
Acquirer’s Multiple (AM): 4.52
An AM below 5 places WLKP deep in value territory — particularly notable for a business with relatively stable, contract-backed cash flows.
Revenue & Profitability
WLKP demonstrates exceptionally strong margins due to its fee-based structure.
Approximate margins:
Gross margin ≈ 30%
Operating margin ≈ 27%
Net margin ≈ 4–5%
Diluted EPS (TTM): ≈ $1.38
These margins reflect:
• Contractual pricing model (reduced volatility)
• High utilization of ethylene facilities
• Limited exposure to spot commodity swings
• Operational efficiency
Unlike typical petrochemical businesses, WLKP’s earnings are less cyclical and more predictable.
Balance Sheet Position
From the balance sheet:
Total Assets: ≈ $1.26B
Total Liabilities: ≈ $454M
Shareholders’ Equity: ≈ $802M
Total Debt: ≈ $400M
Net Debt: ≈ $355M
The balance sheet is conservative, with moderate leverage and strong asset backing relative to its size.
Cash Flow & Capital Efficiency
WLKP generates consistent and reliable cash flows, supporting its income-oriented structure.
Operating Cash Flow (TTM): ≈ $280M
Capital Expenditure: ≈ -$79M
Free Cash Flow: ≈ $200M+
This supports:
✓ Stable and growing distributions
✓ Maintenance and efficiency capex
✓ Debt servicing
✓ Strong cash coverage ratios
The partnership structure prioritizes returning capital to unitholders.
Why WLKP May Be Attractive
Market concerns include:
• Dependence on a single customer (Westlake Corp)
• Limited growth profile
• MLP structure complexity
• Exposure to petrochemical demand cycles
However, fundamentals remain compelling:
• AM of 4.52 signals deep value
• IV/P of 1.80 suggests significant undervaluation
• Contract-based, predictable cash flows
• High operating margins
• Strong free cash flow supporting distributions
Conclusion
With an IV/P of 1.80 and an Acquirer’s Multiple of 4.52, Westlake Chemical Partners screens as a deep value, income-oriented opportunity with unusually stable economics for a chemical-related business.
Its combination of:
• Contracted, low-volatility cash flows
• High-margin operations
• Strong free cash flow generation
• Conservative balance sheet
suggests the market may be undervaluing its defensive earnings profile and yield potential.
For value investors seeking stable cash flows and income with a margin of safety, WLKP may represent an attractive opportunity trading below intrinsic value.