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In 2024Q4, AKAnomics highlighted 27 companies as beats or misses within its tracking universe of 145 US Industrials, Materials, and Consumer Discretionary companies. 70% of those companies ended up on the right side of consensus when they announced their results. Compared to a typical hit rate of ~50% for sell-side or buy-side analysts, a hit rate of 70% stands out. AKAnomics’ Nowcasting approach offers a new set of signals for building long/short portfolios and for harnessing continuously updated global macro-economic information.
Westlake Corporation was one of the 27 companies highlighted and it was highlighted as a miss—consensus expected its revenue growth to go from 0.1% in 2024Q3 to 5.1% in Q4, however AKAnomics’ Nowcasting suggested a below-consensus slowdown to -3.9% in Q4. WLK reported Q4 revenue growth of 0.6%, well below consensus, in the direction of AKAnomics’ results. Following AKAnomics’ Nowcasts through the quarter would have helped analysts’ awareness of economic data most relevant to Westlake—output prices for petrochemicals and pipes/fittings, and North America volumes for petroleum and coal—and informed analysts/traders how to best risk-adjust their positions.
Westlake Corporation Overview
Westlake Corporation stands as a global leader in petrochemicals, plastics, and building products. Westlake operates through two core segments: Performance and Essential Materials, and Housing and Infrastructure Products. The company's portfolio spans from fundamental materials like polyethylene and vinyl chemicals to finished construction products including siding, pipes, and roofing materials. With a global footprint across North America, Europe, and Asia, Westlake serves critical industries from construction to packaging and automotive.
2024Q4 Revenue Surprise: Understanding the Divergence from Consensus
AKAnomics’ Nowcasting displayed a below-consensus revenue outlook, remaining 8-9% below consensus throughout Q4, even though both consensus and AKAnomics’ estimates were trending down throughout the quarter.
AKAnomics uses regional industry Nowcasts that are created from ~8000 global macro-economic data series to assess company performance. Based on the company’s business, the following 5 key regional industries are representative of the company’s business, and in turn AKAnomics’ Nowcasts for these industries show a high correlation with the historical organic growth of the company..
The following chart shows muted or decaying Y/Y growth for the key industries relevant to Westlake. It would have provided a timely indication that Westlake’s business was not likely to show growth for 2024Q4 to the extent that consensus was expecting. Using the economic data, AKAnomics’ proprietary mapping of industry indexes to company revenue growth resulted in a Nowcast that was directionally correct and closer in absolute terms to consensus.
The Takeaway: Information Edge Transforms into Investment Advantage
This case demonstrates the power of precisely mapping macroeconomic information to a company's global operations; it provides investors with substantial edge. By constructing an information mosaic unavailable through conventional channels, AKAnomics transforms complex global economic data into actionable insights that enhance both decision-making processes and investment outcomes.
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