Simple Concepts Research Group

Are Analyst Too Pessimistic About LyondellBasell (NYSE: LYB)?

by | May 16, 2022 | 52 Week Lows

lyondellbasell lyb stock valuation

LyondellBasell Industries (LYB) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for LyondellBasell Industries (LYB) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

LyondellBasell Industries Fundamentals

LYB Stock Rating

Stock Price Target: $129.88

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for LyondellBasell in comparison to the Basic Chemical industry and the S&P 500.

LyondellBasell is a Large Cap company with a Market Cap of $34.6B.

How are investors using LyondellBasell earnings yield to assess the company?

LyondellBasell (LYB)_ Earnings Yield in Comparison to the Basic Chemical Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for LyondellBasell is 21.28%, in comparison to 4.92% for the S&P 500 and 2.93% for the 10-year treasury bond. The median earnings yield for the Basic Chemical industry is 17.80%.

What does LyondellBasell Price-to-Earnings Ratio (P/E) tell investors about the company?

LyondellBasell (LYB)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Basic Chemical Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

LyondellBasell is currently trading at a P/E of 6.02. The P/E for the Basic Chemical industry is 16.36 and the P/E for the S&P 500 is 20.34.

What is the current Price-to-Sales Ratio (P/S) for LyondellBasell?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

LyondellBasell is currently trading at a P/S of 0.76. The P/S for the Basic Chemical industry is 0.89 and the P/S for the S&P 500 is 2.57.

How does LyondellBasell Price-to-BookRatio (P/B) compare to the Basic Chemicals industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

LyondellBasell P/B ratio is 2.93. The P/B for the Basic Chemical industry is 2.51 and the P/B for the S&P 500 is 3.99.

How attractive is LyondellBasell Return on Invested Capital (ROIC) to investors?

LyondellBasell (LYB)_ Return on Invested Capital in Comparison to the Basic Chemical Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

LyondellBasell ROIC is currently 23.78% in comparison to 9.95% for the Basic Chemical industry and 9.10% for the S&P 500.

LyondellBasell (LYB)_ Price Target & 52-Week Price Range

How has TICKER stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, LyondellBasell has traded between the range of $84.17 and $118.01.

The current Analyst Price Target for LyondellBasell is $129.88.

What is LyondellBasell YOY Performance in comparison to its industry and the total market?

The YOY performance for LyondellBasell is -6.44%. The Basic Chemical industry has a YOY performance of -4.02% in comparison to the YOY S&P 500 performance of -3.09%.

LyondellBasell(LYB)_ YOY Performance in Comparison to the Basic Chemical Industry and the S&P 500

Recent Financial Results (Q1, 2022)

  • Net Income reported of $1.3B
  • Diluted earnings per share of $4.00
  • EBITD of $2B; strongest first quarter since 2015 and record first quarter for I&D segment
  • Cash from operating activities of $1.5B
  • Returned $0.6B to shareholders through dividends and share repurchases

Stock Price Target: $129.88

Company Overview

LYB Stock Rating

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and Polyolefins—Americas; Olefins and Polyolefins—Europe, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology.

It produces and markets olefins and co-products; polyolefins; polyethylene products, which consist of high density polyethylene, low density polyethylene, and linear low density polyethylene; and polypropylene (PP) products, such as PP homopolymers and copolymers.

LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.

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This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.