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As part of our ongoing series at The Acquirer’s Multiple, each week we spotlight a stock from our Stock Screeners that might be a deeply undervalued gem hiding in plain sight. This week’s spotlight is Westlake Chemical Partners LP (WLKP).

Westlake Chemical Partners LP operates, acquires, and develops ethylene production facilities through a fee-based structure that insulates it from commodity price volatility. The partnership owns a 22.8% interest in Westlake Chemical OpCo LP, which produces ethylene — the fundamental building block for plastics and industrial chemicals. Its long-term supply agreement with parent Westlake Corporation provides predictable cash flows and a stable foundation for attractive unitholder distributions.

What is IV/P (Intrinsic Value to Price)?

IV/P tells you whether a stock offers more intrinsic value than the price you are paying for it. The calculation blends earnings power, reinvestment efficiency, and capital-return policy to estimate intrinsic value — a conservative measure of what the business is worth.

The interpretation is straightforward:
IV/P above 1 suggests undervaluation.
IV/P below 1 suggests overvaluation.

The further above 1, the more value you may be getting per dollar invested.

WLKP’s IV/P is 2.40, implying its intrinsic value is more than twice its current market price — a strong signal that the market may be underestimating its long-term earnings power and consistent fee-based profitability.

Supporting Metrics

Market Cap: ~$680 M
Enterprise Value (EV): ~$1.02 B
Free Cash Flow (TTM): ~$244 M
Free Cash Flow Yield: ~36%
Acquirer’s Multiple: 4.03×

With an EV/FCF ratio of just 4×, WLKP trades at levels that imply little to no growth. Yet, its stable cash generation and long-term contract economics suggest far less operational risk than most commodity-linked peers. This valuation discount highlights WLKP’s appeal as both an income generator and a potential value re-rating candidate.

Revenue & Profitability

Revenue (TTM): ~$1.10 B
Operating Income (TTM): ~$339 M
Operating Margin: ~30.8%
Net Income (TTM): ~$52.6 M
Net Margin: ~4.8%
Diluted EPS (TTM): ~$1.49

Revenue has stabilized around the $1.1 billion mark after several years of normalization in the chemical cycle. WLKP’s fixed-margin model ensures resilient operating profits regardless of market swings, producing consistent returns on invested capital and supporting its strong cash-flow profile.

Balance Sheet Strength

Total Assets (2024): ~$1.29 B
Cash & Equivalents: ~$58 M
Total Debt: ~$400 M
Shareholder Equity: ~$829 M
Net Debt: ~$342 M
Working Capital: ~$185 M

The balance sheet remains conservative with manageable leverage and a solid equity base. Steady working capital and predictable inflows allow WLKP to maintain high payout ratios without compromising reinvestment flexibility or financial stability.

Capital Returns

Distribution Yield (TTM): ~8.5%
Capital Expenditure (TTM): ~$69 M

WLKP has maintained stable quarterly cash distributions since its 2014 IPO. Its capital allocation is simple and disciplined — minimal reinvestment needs and consistent cash return to unitholders. The 8%+ yield is well-covered by operating cash flow, providing attractive income visibility.

Why Might WLKP Be Undervalued?

WLKP’s market perception as a cyclical chemical play overlooks its unique fee-based structure and durable cash flows. Its fixed-margin agreement with Westlake Corporation sharply reduces exposure to ethylene price swings, anchoring profitability even in weaker commodity environments. With an IV/P of 2.40 and a low Acquirer’s Multiple of 4.03, the partnership looks mispriced for its stability and high yield — an uncommon blend of safety and value.

Conclusion

With an IV/P of 2.40 and an Acquirer’s Multiple of 4.03, Westlake Chemical Partners LP (WLKP) offers a compelling mix of yield, quality, and deep value. Its long-term contracts, consistent free cash flow, and disciplined capital returns make it a standout in the chemicals sector. For value investors seeking durable cash flows and strong downside protection, WLKP represents an underappreciated opportunity hiding in plain sight.

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