Dow Chemical Co.

Dow Chemical Co. (DOW - Analyst Report) produced better than expected second-quarter earnings in late July and is paying down its debt load from its acquisition of Rohm and Haas.

Company Description

The Dow Chemical Company manufactures and sells chemicals, plastic materials, agriculture and other specialized products and services worldwide. The company was founded in 1897 and has a market cap of $29 billion.

Shares of DOW have rallied big over the last few months as the company recovers from the global economic crisis and focuses on repaying debt related to its acquaition of fellow chemical maker Rohm and Haas. The company's 2nd quarter results, reported in late July, showed revenue was down from last year, but earnings came in ahead better than expected.

Second-Quarter Results

Sales for the quarter were down 31% from last year to $11.32 billion. But earnings came in at 5 cents per share, 10 cents ahead of the Zacks Consensus Estimate.

More recently, Dow has made it very clear that it is intent on paying down its bloated debt situation due to its Rohm and Haas acquisition, which pushed its total debt load to $22 billion from $8 billion. The company used a large portion of its $1.65 billion in proceeds from the recent sale of Mortan Salt to pay off a $1 billion bridge loan. For full coverage on the debt story from the Zacks analyst department click the link below.

Dow Sells Morton, Pays Down Debt

Bullish Next-Year Estimate

The current-year estimate is a slightly anemic 27 cents, but with optimism abound, the next-year estimate is very bullish, pegged at $1.14, a 317% growth projection.

Valuation

Based on the more bullish next-year estimate, this stocks has a P/E multiple of 21X, a premium to the overall market.

The Chart

Shares of DOW are up more than 300% since bottoming out just above $5 in early March, recently topping off above $25. Take a look at the big run below.

Read the full analyst report on DOW