LyondellBasell Industries NV (LYB)

Conclusion

LyondellBasell Industries NV is a Rotterdam-based chemical company that produces olefins, polyolefins, intermediate chemicals and engineered polymer compounds for packaging, automotive and coatings customers. At 59.50 USD on 9 November 2026, its market capitalisation is 19.23 billion USD.

The verdict is undervalued. The fair value band runs from 120.01 to 180.02 USD with a midpoint of 150.02 USD, giving a margin of safety of 152.1% at the current price. The DCF gives 219.60 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 80.43 USD. Against their own ten-year medians, the price-to-earnings ratio of 14.77 is above its median of 9.06, while the price-to-free-cash-flow ratio of 3.75 is below its median of 11.84. The reverse DCF implies revenue growth of -18.2% a year, whereas revenue grew at 1.7% a year over five years and free cash flow per share fell at 22.9% a year over the same period.

What holds the case up is the trailing free cash flow conversion of 394.3%, the return on invested capital of 8.35% against a WACC of 6.82%, and a current ratio of 1.78. What would break it is the next-year earnings growth estimate of -28.8%, the net debt to EBITDA of 2.78, and the Piotroski score of 3 out of 9.

Financial health

Financial health is yellow: the current ratio of 1.78 is assessed as good, while net debt to EBITDA of 2.78 and interest coverage of 4.56 are assessed as neutral. The quick ratio is 1.02 and debt to equity is 1.21, both as at 30 September 2026. The Altman Z-score is 2.12, which places the company in the grey zone; the Altman model was designed for manufacturers, and this chemical producer is broadly one of them. Insolvency risk is low, about 1.9% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is yellow, with three signals assessed as good and one as bad. Free cash flow conversion is 394.3% on a trailing basis and 128.8% on a five-year basis. The accrual ratio is -8.62%, stock-based compensation is 0.08% of revenue, and free cash flow after stock-based compensation is 5.11 billion USD. The share count fell at 0.73% a year over five years, which points to buybacks. The Piotroski score is 3 out of 9, assessed as bad, while the Beneish M-score of -3.13 reads as unlikely. Over the last eight quarters the company beat estimates four times and missed four times, with an average surprise of -15.69%. Current-year estimates were revised by -3.36% over 90 days, with 4 upward and 8 downward revisions in the last 30 days. Next-year estimates were revised by -1.17%, with a projected earnings growth of -28.8%.

Profitability

Profitability is yellow, with all four signals assessed as neutral. The gross margin of 14.69% sits slightly above its ten-year median of 14.36%, but the operating margin of 8.79% is below its median of 10.98%, and the net margin of 4.07% is well below its median of 8.73%. Operating margin stability is 0.55. Return on invested capital is 8.35% against a WACC of 6.82%, with the ROIC minus WACC value at 1.53%, and the five-year median ROIC is 10.88%. Return on equity is 11.57%, but the DuPont split shows an equity multiplier of 3.37 and an asset turnover of 0.89, so much of the return rests on leverage. The 2025 net margin in the DuPont breakdown is -2.46%.

Growth

Growth is red, with two signals assessed as bad and one as neutral. Revenue compound growth is -15.77% over three years, 1.67% over five years and -0.82% over ten years. Revenue grew in only 4 of the 10 comparable years. Free cash flow per share compounded at -54.78% over three years, -22.85% over five years and -18.69% over ten years. Earnings per share growth is not available.

Valuation

Valuation is green, with the verdict signal assessed as good. The price-to-earnings ratio of 14.77 compares with a ten-year median of 9.06, a premium of 63.0%. The enterprise value to EBITDA of 7.94 compares with a median of 7.16, a premium of 10.8%. Price-to-free-cash-flow of 3.75 compares with a median of 11.84, a premium of -68.4%. Price-to-sales of 0.60 compares with a median of 0.81, a premium of -26.0%, and price-to-book of 1.71 compares with a median of 3.01, a premium of -43.2%. The DCF gives 219.60 USD per share at a discount rate of 8.9%, with the terminal value accounting for 53% of that figure. The tax rate of 21% was assumed rather than taken from reported figures. The fair value band of 120.01 to 180.02 USD is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium and capped growth; it is not a price target. The dividend yield is 10.36% on a trailing basis and 4.18% on a forward basis, with a payout of 38.8% of free cash flow.

Risks

The main weakness is leverage: a net debt to EBITDA of 2.78 and interest coverage of 4.56 leave less room if earnings fall further. A next-year earnings growth estimate of -28.8% would reduce coverage and could pressure the dividend. A Piotroski score of 3 out of 9 signals weak improvement in the company's fundamentals. Earnings per share growth is not available, so the earnings trend can only be read through the free cash flow and revenue figures. This analysis has no debt maturity schedule and no revenue breakdown by segment, so refinancing pressure and the performance of individual business lines cannot be assessed.