LyondellBasell Industries N.V.

Analysis of LyondellBasell (LYB)

Technical Perspective LYB shows strong recent momentum with notable short-term gains, significantly outperforming the market. While it remains well below its 52-week high, the stock has recovered substantially from its lows and appears to be in a phase of consolidation rather than being overextended. The combination of upward price action and a low beta suggests a favorable risk-reward setup from a technical standpoint.

Fundamental Health Fundamentally, the company faces clear headwinds, with declining revenue and negative profitability in the latest quarter. The exceptionally weak margins and negative interest coverage raise concerns about near-term earnings power. However, a solid cash position provides some financial flexibility despite the anomalous data points affecting leverage and efficiency ratios.

Valuation & Risk Assessment Valuation metrics are mixed; the high trailing P/E ratio signals overvaluation, but the reasonable Price-to-Book ratio aligns with industry norms. Key risks include exposure to chemical industry cycles and commodity prices, though low market volatility and minimal short interest provide some cushion. The stock's substantial drawdown history underscores its sensitivity to sector downturns.

Investment Recommendation Consider a Buy. LYB’s strong technical momentum and reasonable asset-based valuation partially offset its current profitability challenges. The company’s robust cash reserves and market-leading position provide a foundation for recovery as industry conditions stabilize. For investors comfortable with cyclicality, LYB offers a promising rebound candidate with mitigated downside volatility.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for LyondellBasell (LYB):

12-Month Outlook for LYB

The primary catalysts for LYB over the next year are the potential stabilization of chemical industry conditions and a cyclical recovery in commodity prices, which could reverse recent earnings weakness. The company's strong cash position and technical momentum provide a solid foundation for this rebound. Key risks remain its high exposure to commodity chemical cycles and the continuation of current pressures on revenue and margins, as highlighted by negative profitability. With no specific analyst target provided, a reasonable expectation would be for the stock to test the upper bounds of its 52-week range, contingent on a meaningful sector-wide recovery.

Wall Street Consensus

Most Wall Street analysts are optimistic about LyondellBasell Industries N.V.'s 12-month outlook, with consensus target around $55.33, indicating expected upside potential.

Overall, LYB has investment potential but also faces challenges. Here are key factors to weigh before investing.

LYB has demonstrated strong momentum with substantial recent gains, though it remains significantly below its 52-week peak.

The stock has delivered impressive short-term returns, gaining 10.02% over one month and 27.75% over three months, significantly outperforming the broader market by 27.77% during the latter period. Despite its low beta of 0.707 indicating lower volatility than the market, LYB has posted returns more characteristic of a higher-beta stock recently.

Currently trading at $55.98, LYB sits approximately 29% above its 52-week low but remains about 29% below its 52-week high of $78.516. Given the substantial recovery from its maximum drawdown of -45.95% and the strong momentum, the stock appears to be in a consolidating phase rather than being severely overbought or oversold.

Based on the Q4 2025 data provided, here is an analysis of LYB's fundamentals.

Revenue & Profitability: LYB's revenue of $7.09 billion in Q4 was a sequential decline from Q3. Profitability remains severely challenged, with the company reporting a gross profit margin of only 6.5% and an operating loss of $40 million. The negative net income and EPS of -$0.45 highlight significant pressure on the bottom line.

Financial Health: Critical liquidity and leverage ratios are reported as zero, which is anomalous and prevents a standard assessment of debt levels and coverage. The interest coverage ratio is negative at -0.37, indicating that operating profits are insufficient to cover interest expenses. The cash position appears relatively strong with a cash per share of $10.71.

Operational Efficiency: Operational metrics are extremely distorted, with return on assets and return on capital employed showing implausibly large negative values, suggesting significant asset impairments or losses that have eroded the capital base. The asset turnover ratio is artificially inflated for the same reason, making a reliable assessment of true asset utilization efficiency impossible with this dataset.

Based on the available metrics, LYB's valuation presents a mixed picture. The current PE ratio of 55.27 is substantially high, strongly suggesting overvaluation. However, the forward PE is negative due to an expected loss, and the positive PEG ratio indicates the market may be pricing in significant future earnings growth, which tempers the conclusion of overvaluation on this metric alone.

Without specific industry averages for a peer comparison, a definitive relative valuation is challenging. The elevated EV/EBITDA of 30.42 generally indicates a premium valuation, while the Price-to-Book ratio of 1.7 appears reasonable for a capital-intensive industry like chemicals. A comparison against the chemical industry's average multiples would be necessary to determine if LYB trades at a premium or discount to its peers.

Volatility Risk: With a beta of 0.707, LYB exhibits lower volatility than the broader market, suggesting it is less sensitive to market swings. However, the significant 1-year maximum drawdown of -45.95% indicates severe downside risk during unfavorable market conditions, highlighting its vulnerability to sector-specific downturns.

Other Risks: The absence of notable short interest suggests that there is currently no significant speculative pressure betting against the stock. While this is a positive indicator, the primary risks likely stem from cyclical demand for its chemical products, exposure to commodity price fluctuations, and broader economic health.