LYONDELLBASELL INDUSTRIES N.V. (LYB): what the price requires

The current priced-in claim for LYONDELLBASELL INDUSTRIES N.V. (LYB) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/LYB

Headline

FieldValue
TickerLYB
CompanyLYONDELLBASELL INDUSTRIES N.V.
Current price$58.27/sh
CompositionOlefins and co-products 14% / Polyethylene 24% / Polypropylene 19% / Propylene oxide and derivatives 7% / Oxyfuels and related products 16% / Intermediate chemicals 6% / Compounding and solutions 11% / Other 2%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed7.6%
Operating margin (mid-cycle)11.1%
Margin compression implied-3.5pp
Trailing margin (depressed year)-0.3%
Multiple paid7x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.39σ
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power/growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.08x3expensive
Earnings1.73x3expensive
Relative0.42x3justifies
Growth2.03x4expensive

Families that justify the price: Relative Families that call it expensive: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$31.191.87xyesFCF base $0.9B, growth -10% (input: historical growth), terminal g 0.5%, WACC 9.1%, 5yr projection
DCF Exit MultipleGrowth$60.650.96xyesExit EV/EBITDA: 375.2x / 377.2x / 379.2x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$137.900.42xyesP/S fallback (negative EPS): Sector P/S 1.5x × TTM revenue — excluded from consensus
Simple DDMGrowth$14.943.90xyesDPS $2.78, g=-7.9% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$0.8568.55xyesStage 1: -75% for 5yr, Stage 2: 3.5% perpetual (excluded from median)
Simple Excess ReturnAsset$31.111.87xyesReference only (book value floor): BV/sh $31.11, ROE negative
Two-Stage Excess ReturnAsset$28.002.08xyesReference only (book value with convergence): BV/sh $31.11, ROE converges to ke
Discounted Future Market CapGrowth$26.582.19xyesRev $29.7B, growth -15% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$116.540.50xyesNormalized EBIT (5y avg op income, one-time charges added back) $3.66B × (1−21%) / WACC 9.1% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$4.5012.95xyesEBITDA $0.05B × sector EV/EBITDA 8.0x
FCF YieldEarnings$33.751.73xyesFCF $908.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$30.301.92xyesSBC-adj FCF $0.81B (FCF $0.91B − SBC $0.10B) capitalized at Kₑ
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$7.228.07xyesBV $31.11 × (ROIC 2.1% / WACC 9.1%)
P/Sales SectorRelative$137.900.42xyesRevenue $29.67B × sector P/S 1.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$8.6b
Net debt / NOPAT (after-tax)3.23x
Net debt / operating income (pre-tax)2.55x
Interest coverage6.8x
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 11.1%); the trailing year was depressed.

Bullet Takeaways

Bull Case

The balance sheet is where the LyondellBasell story has to start, because it is what determines whether the company can wait out a chemical downturn that has pushed even strong operators into the red. LYB ended the first quarter with $2.6 billion of cash and $7.3 billion of available liquidity, and management is explicit about defending an investment-grade balance sheet. That liquidity is the difference between a cyclical that survives to the next upcycle and one that is forced into distressed decisions at the bottom. The company has made hard choices to protect it, cutting the dividend in half and launching a $1.3 billion cash-improvement plan to be completed by the end of 2026.

The earnings power of the franchise is real and currently invisible. The trailing operating margin is slightly negative, but that reflects the deepest petrochemical trough in years, not the through-cycle economics of the business. Capitalizing the five-year average operating income, which spans both boom and bust, points to earnings power far above what the trailing year shows, and the price sits below that normalized figure. LYB is one of the largest producers of polyethylene and polypropylene in the world, with a cost-advantaged North American position tied to cheap US natural gas and ethane, and that feedstock advantage is structural. When the cycle turns, low-cost producers earn outsized margins, and LYB is built to be one of them.

The portfolio is being actively reshaped to lift the floor under future earnings. The company sold four European assets, a milestone in a transformation aimed at raising mid-cycle EBITDA margins from about 18% toward over 21%. Exiting high-cost, structurally disadvantaged European capacity concentrates the company in its advantaged North American and licensing businesses. Management also signaled meaningful sequential improvement expected in the second quarter across most segments, helped by tighter global supply and favorable export pricing. The bull case is a low-cost, well-capitalized cyclical, restructuring at the bottom, with a covered dividend yield around 5% to pay holders while they wait for the recovery.

Bear Case

The structural truth a holder has to face is that this is a deeply cyclical commodity business at or near the bottom of its cycle, and the clearest evidence is that LyondellBasell just cut its dividend in half. The quarterly payout was reduced from $1.37 to $0.69 in February 2026, a 50% cut that management does not make when the business is healthy. A dividend cut is the company telling shareholders that the cash flow could not support the prior payout, and it reframes the stock: this is not a stable income compounder, it is a cyclical that has been losing money on a trailing basis, with an operating margin that turned slightly negative and a return on equity below zero. The market is pricing a recovery that has not yet arrived.

The commodity nature means LYB controls neither its prices nor the global capacity that sets them. Petrochemical margins are driven by the spread between feedstock costs and product prices, and that spread has been crushed by a wave of new capacity, much of it in China and the Middle East, added during the last boom and still being absorbed. The 10-K is candid about the capital intensity and the financing exposure, warning that the company requires "significant capital to operate our current business and fund our dividends, share repurchases, and growth strategy" and that "limitations on access to external financing could adversely affect our operating results." A capital-hungry business in a low-margin trough is exactly the profile where leverage becomes dangerous, and LYB carries about $10 billion of net debt.

The recovery the price assumes depends on variables outside the company's control. Management points to second-quarter improvement driven partly by Middle East supply disruptions and favorable export pricing, but a margin recovery built on geopolitical supply shocks is not a durable one; it reverses when the disruption clears. The European asset sales improve the structural margin, but they also shrink the company, and the cash-improvement plan is a defensive cost program, not a growth story. Only the relative-multiple lens supports the price; the asset, earnings-power, and growth methods all read it as expensive against trailing results. The bear case is straightforward: a money-losing cyclical that just cut its dividend, carrying real debt into a chemical glut, is cheap for a reason, and the timing and strength of the recovery that would vindicate the price are genuinely uncertain.

Valuation

The price has to be read as a bet on a cyclical recovery, because that is the only way the methods reconcile. Trailing results are at a trough: the operating margin is slightly negative and return on equity is below zero, so the asset-based, earnings-power, and growth methods all read the stock as expensive against current numbers. Only the relative-multiple lens supports the price. That is the unmistakable signature of a commodity business priced not on what it earns today but on what it is expected to earn when the cycle turns. The buyer is underwriting a recovery in petrochemical margins, not paying for the trailing income, which is negative.

The more representative measure is normalized, through-cycle earnings power, and it tells a more constructive story than the trough does. Capitalizing the five-year average operating income, which smooths across the boom and the bust, points to earnings power well above the current price, reflecting the value of LYB's cost-advantaged North American scale. The gap between that normalized figure and the depressed trailing methods is the entire valuation question: if you believe the cycle reverts toward its historical mid-point, the stock is cheap; if the chemical glut persists and margins stay compressed, the trailing methods are the honest read. The portfolio reshaping, exiting European assets to lift mid-cycle margins toward 21%, is management's attempt to raise that normalized floor.

Solvency is the dimension that bounds the downside and justifies the willingness to wait. LYB holds $2.6 billion of cash and $7.3 billion of liquidity against roughly $10 billion of net debt, and the 50% dividend cut plus the $1.3 billion cash-improvement plan are deliberate moves to protect the balance sheet and an investment-grade rating through the trough. The company is generating positive free cash flow even in a difficult environment. The decisive variable for the price is the timing and durability of the margin recovery: the normalized earnings power supports a value above today's level, but realizing it requires the chemical cycle to turn, and the dividend cut is the company's own acknowledgment that the bottom has been deeper and longer than hoped.

Catalysts

The first-quarter 2026 report on May 1 was a beat against low expectations even as year-over-year earnings fell. The shares rose on the print, with management emphasizing cost discipline, cash generation, and continued capital returns, including $224 million of shareholder returns alongside $269 million of capital expenditure, while holding $2.6 billion of cash and $7.3 billion of liquidity. The defining capital decision had come earlier: the quarterly dividend was cut 50% from $1.37 to $0.69 in February 2026 to protect the balance sheet through the downturn.

The forward catalysts are the margin recovery and the portfolio transformation. Management anticipates significant sequential improvement in the second quarter across most segments, driven by tighter supply from Middle East disruptions and favorable export pricing for North American olefins and polyolefins. The strategic sale of four European assets advances a plan to lift mid-cycle EBITDA margins from about 18% toward over 21%, and the company is targeting a $1.3 billion cash-improvement plan by the end of 2026. The catalysts that matter are the trajectory of petrochemical margins, which determines whether the trough is ending, and the execution of the cost and portfolio programs, which set the normalized earnings power the price is betting on.

Peer Cohorts (Per Segment, With Filing Citations)

O&P - Americas / O&P - EAI (reported)

I&D (reported)

APS (reported)

Technology (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

LyondellBasell dividend announcement, February 2026 · LyondellBasell Q1 FY2026 results, May 2026 · LyondellBasell Q1 FY2026 outlook, May 2026

View the full interactive LYB report on boothcheck