Westlake Chemical Partners LP (WLKP): Is This Deeply Undervalued Stock a Hidden Gem?

As part of our ongoing series here at The Acquirer’s Multiple, each week we focus on one of the stocks from our Stock Screeners, and why it might be a deeply undervalued gem.

The stock this week is:

Westlake Chemical Partners LP (WLKP)

Westlake Chemical Partners is a U.S.-based master limited partnership (MLP) that operates, acquires, and develops ethylene production facilities. The company primarily supports Westlake Corporation through long-term contracts, providing a steady revenue stream insulated from short-term commodity price swings. As a niche player in the commodity chemicals space, WLKP offers investors exposure to essential infrastructure with attractive yield characteristics.

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

IV/P tells you if a stock is a good deal based on how much value you’re getting for the price you pay.

The Calculation:

It combines a stock’s earning power, growth potential, and what it’s returning to shareholders (via dividends and buybacks) to calculate its Implied Value — what the business is worth based on its fundamentals.

The Interpretation:

IV/P > 1: You’re getting more value than you’re paying for — a potential bargain.
IV/P < 1: You’re paying more than the business is worth — possibly overvalued.

If IV/P is very high, it signals the stock might be trading at a deep discount.

IV/P for WLKP: 1.70

WLKP currently has an IV/P of 1.70, meaning the stock’s implied value is estimated to be 1.7 times greater than its current price. Put simply:

For every $1 you invest, you’re potentially getting $1.70 of value.

That indicates a modest but meaningful margin of safety — especially when combined with strong yield metrics.

Supporting Metrics:

Shareholder Yield: 8.25%
Entirely from dividends — a consistent income stream for unitholders.
Free Cash Flow Yield: 46.10%
This is an exceptionally high FCF yield, signaling massive cash generation relative to market cap.

Why Might WLKP Be Undervalued?

Limited Investor Coverage
As an MLP with a relatively small market cap (~$805M), WLKP may fly under the radar of larger institutional investors and funds.
Income Vehicle Stigma
MLPs are often seen as income-only plays, and some investors may overlook the impressive free cash flow generation and strategic positioning.
Commodity Label Confusion
While categorized under “commodity chemicals,” WLKP’s long-term contract model reduces exposure to market volatility — a nuance some investors may miss.

Conclusion:

With an IV/P of 1.70, Westlake Chemical Partners LP (WLKP) appears moderately undervalued, particularly for income-seeking or value-oriented investors. Its strong cash generation, steady dividend payout, and niche positioning in a vital part of the chemical supply chain make it worth a closer look. While not a high-growth story, WLKP offers reliability and value — a rare combination in today’s market.