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Dow's (DOW) Earnings and Revenues Beat Estimates in Q2
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Dow Inc. (DOW - Free Report) recorded loss (on a reported basis) from continuing operations of 31 cents per share for second-quarter 2020 against earnings of 10 cents per share a year ago.
Barring one-time items, adjusted loss was 26 cents per share for the reported quarter, narrower than the Zacks Consensus Estimate of a loss of 30 cents.
Dow raked in net sales of $8,354 million for the quarter, down roughly 24% year over year. It, however, beat the Zacks Consensus Estimate of $7,963.3 million.
Sales fell due to lower local pricing and a decline in volumes resulting from the coronavirus pandemic. Currency reduced sales by 1% in the quarter.
Volumes fell 9% in the quarter as higher demand in food packaging, health & hygiene, home care and pharma applications was more than offset by softness in durable good end-markets. Dow also saw a 14% decline in local prices, mainly resulting from reduced global energy prices.
Packaging & Specialty Plastics: The division’s sales fell 23% year over year to $4 billion in the reported quarter. Volumes were flat while local prices slipped 22%. Currency also reduced sales by 1%.
Industrial Intermediates & Infrastructure: Sales for the unit fell 28% year over year to $2.4 billion. Volumes fell 18% while local prices declined 9%. Currency lowered sales by 1%.
Performance Materials & Coatings: Revenues from the division went down 21% year over year to $1.9 billion. Sales were impacted by volumes and local price declines of 14% and 6%, respectively. Currency also reduced sales by 1%.
Financials
Dow had cash and cash equivalents of $3,724 million at the end of the quarter. Long-term debt was $16,288 million.
Cash provided by operating activities from continuing operations was $1.6 billion in the reported quarter while free cash flow was $1.3 billion.
Dow also returned $516 million to shareholders in the second quarter through dividends. It also paid down roughly $600 million of debt in the quarter.
Outlook
Looking ahead, Dow sees a gradual and uneven recovery based on what it has witnessed in the second quarter and in July. The company noted that its structural cost improvements coupled with disciplined approach to cash generation and capital allocation will help it to capture significant value as markets recover.
Dow further noted that it will increase its operating expense reduction target for 2020 to $500 million from $350 million through additional structural cost actions. It will initiate a restructuring program, aiming more than $300 million in annualized EBITDA benefit by the end of next year. This includes a 6% reduction in its global workforce and actions to exit uncompetitive assets.
Price Performance
Dow’s shares are down 19% year to date, compared with a 10.4% decline recorded by the industry.
Zacks Rank & Stocks to Consider
Dow currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Royal Gold, Inc. (RGLD - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) and Harmony Gold Mining Company Limited (HMY - Free Report) .
Royal Gold has a projected earnings growth rate of 62.1% for the current year. The company’s shares have gained around 14% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has a projected earnings growth rate of 55.6% for the current year. The company’s shares have rallied roughly 32% in a year. It currently carries a Zacks Rank #1.
Harmony Gold has an expected earnings growth rate of 264.3% for the current fiscal year. The company’s shares have shot up around 165% in the past year. It presently carries a Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Dow's (DOW) Earnings and Revenues Beat Estimates in Q2
Dow Inc. (DOW - Free Report) recorded loss (on a reported basis) from continuing operations of 31 cents per share for second-quarter 2020 against earnings of 10 cents per share a year ago.
Barring one-time items, adjusted loss was 26 cents per share for the reported quarter, narrower than the Zacks Consensus Estimate of a loss of 30 cents.
Dow raked in net sales of $8,354 million for the quarter, down roughly 24% year over year. It, however, beat the Zacks Consensus Estimate of $7,963.3 million.
Sales fell due to lower local pricing and a decline in volumes resulting from the coronavirus pandemic. Currency reduced sales by 1% in the quarter.
Volumes fell 9% in the quarter as higher demand in food packaging, health & hygiene, home care and pharma applications was more than offset by softness in durable good end-markets. Dow also saw a 14% decline in local prices, mainly resulting from reduced global energy prices.
Dow Inc. Price, Consensus and EPS Surprise
Dow Inc. price-consensus-eps-surprise-chart | Dow Inc. Quote
Segment Highlights
Packaging & Specialty Plastics: The division’s sales fell 23% year over year to $4 billion in the reported quarter. Volumes were flat while local prices slipped 22%. Currency also reduced sales by 1%.
Industrial Intermediates & Infrastructure: Sales for the unit fell 28% year over year to $2.4 billion. Volumes fell 18% while local prices declined 9%. Currency lowered sales by 1%.
Performance Materials & Coatings: Revenues from the division went down 21% year over year to $1.9 billion. Sales were impacted by volumes and local price declines of 14% and 6%, respectively. Currency also reduced sales by 1%.
Financials
Dow had cash and cash equivalents of $3,724 million at the end of the quarter. Long-term debt was $16,288 million.
Cash provided by operating activities from continuing operations was $1.6 billion in the reported quarter while free cash flow was $1.3 billion.
Dow also returned $516 million to shareholders in the second quarter through dividends. It also paid down roughly $600 million of debt in the quarter.
Outlook
Looking ahead, Dow sees a gradual and uneven recovery based on what it has witnessed in the second quarter and in July. The company noted that its structural cost improvements coupled with disciplined approach to cash generation and capital allocation will help it to capture significant value as markets recover.
Dow further noted that it will increase its operating expense reduction target for 2020 to $500 million from $350 million through additional structural cost actions. It will initiate a restructuring program, aiming more than $300 million in annualized EBITDA benefit by the end of next year. This includes a 6% reduction in its global workforce and actions to exit uncompetitive assets.
Price Performance
Dow’s shares are down 19% year to date, compared with a 10.4% decline recorded by the industry.
Zacks Rank & Stocks to Consider
Dow currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Royal Gold, Inc. (RGLD - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) and Harmony Gold Mining Company Limited (HMY - Free Report) .
Royal Gold has a projected earnings growth rate of 62.1% for the current year. The company’s shares have gained around 14% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has a projected earnings growth rate of 55.6% for the current year. The company’s shares have rallied roughly 32% in a year. It currently carries a Zacks Rank #1.
Harmony Gold has an expected earnings growth rate of 264.3% for the current fiscal year. The company’s shares have shot up around 165% in the past year. It presently carries a Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>