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Dow (DOW) Warms Up to Q3 Earnings: What's in the Cards?
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Dow Inc. (DOW - Free Report) is scheduled to come up with third-quarter 2022 results before the opening bell on Oct 20. The company is expected to have benefited from strong demand across a number of end markets, higher prices and its cost and productivity initiatives. However, raw material and energy cost inflation and plant turnaround costs are likely to have affected its performance.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 8.7%. It posted an earnings surprise of 7.9% in the last reported quarter.
Dow’s shares are down 23.2% over a year compared with 18% decline recorded by the industry.
Image Source: Zacks Investment Research
What do the Estimates Say?
Dow expects revenues for the third quarter to be in the band of $14.3-$14.8 billion.
The Zacks Consensus Estimate for revenues for Dow is currently pegged at $13,403.8 million, suggesting a decline of 9.7% year over year. Our estimate for the quarter is $14,613.3 million.
The Zacks Consensus Estimate for revenues in the Packaging & Specialty Plastics segment is currently pegged at $7,426 million, calling for a decline of around 4% year over year. Our estimate for the quarter is $7,627.3 million.
The consensus mark for revenues in the Industrial Intermediates & Infrastructure segment is pegged at $4,186 million, indicating a roughly 6.6% year-over-year decline. Our estimate for the quarter is $4,163.4 million. The same for the Performance Materials & Coatings unit is pinned at $2,713 million, suggesting an increase of around 7.4% year over year. Our estimate for the quarter is $2,772.1 million.
Some Factors at Play
Dow is expected to have benefited, in the third quarter, from higher demand across a number of markets including personal care, food packaging and construction. Demand is likely to have been supported by healthy industrial activities. Healthy demand in consumer and industrial end markets and higher prices are expected to have aided its results in the September quarter.
The company is also expected to have gained from cost synergy savings and productivity actions. It remains focused on maintaining cost and operational discipline. Benefits of its restructuring program are also likely to get reflected on the company’s bottom line in the third quarter.
However, the company is expected to have witnessed challenges from higher raw material and energy costs in the third quarter. Raw material and logistical constraints are likely to have persisted in the quarter. Raw material inflation is expected to have affected the company’s Packaging & Specialty Plastics and Industrial Intermediates & Infrastructure segments in the third quarter. The company’s segments are also likely to have been affected by higher energy costs in Europe.
Dow is also likely to have faced headwinds from plant turnaround costs in the September quarter. It sees a headwind of $75 million in its Packaging & Specialty Plastics segment in the third quarter associated with cracker maintenances in Texas, Canada and Argentina. Turnaround costs are expected to have impacted margins in the quarter to be reported.
Our proven model does not conclusively predict an earnings beat for Dow this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Dow is 0.00%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $1.07. Our estimate for the quarter is $1.41. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Dow currently carries a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
The consensus estimate for Albemarle’s third-quarter earnings has been revised 9% upward in the past 60 days. The Zacks Consensus Estimate for ALB’s earnings for the quarter is pegged at $6.81.
Koppers Holdings Inc. (KOP - Free Report) , expected to release earnings on Nov 3, has an Earnings ESP of +2.28% and carries a Zacks Rank #2.
The Zacks Consensus Estimate for Koppers’ third-quarter earnings has been revised 2.6% upward in the past 60 days. The consensus estimate for KOP’s earnings for the quarter is currently pegged at $1.17.
FMC Corporation (FMC - Free Report) , scheduled to release earnings on Nov 1, has an Earnings ESP of +0.30%.
The Zacks Consensus Estimate for FMC's earnings for the third quarter is currently pegged at $1.11. FMC currently carries a Zacks Rank #3.
Image: Bigstock
Dow (DOW) Warms Up to Q3 Earnings: What's in the Cards?
Dow Inc. (DOW - Free Report) is scheduled to come up with third-quarter 2022 results before the opening bell on Oct 20. The company is expected to have benefited from strong demand across a number of end markets, higher prices and its cost and productivity initiatives. However, raw material and energy cost inflation and plant turnaround costs are likely to have affected its performance.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 8.7%. It posted an earnings surprise of 7.9% in the last reported quarter.
Dow’s shares are down 23.2% over a year compared with 18% decline recorded by the industry.
Image Source: Zacks Investment Research
What do the Estimates Say?
Dow expects revenues for the third quarter to be in the band of $14.3-$14.8 billion.
The Zacks Consensus Estimate for revenues for Dow is currently pegged at $13,403.8 million, suggesting a decline of 9.7% year over year. Our estimate for the quarter is $14,613.3 million.
The Zacks Consensus Estimate for revenues in the Packaging & Specialty Plastics segment is currently pegged at $7,426 million, calling for a decline of around 4% year over year. Our estimate for the quarter is $7,627.3 million.
The consensus mark for revenues in the Industrial Intermediates & Infrastructure segment is pegged at $4,186 million, indicating a roughly 6.6% year-over-year decline. Our estimate for the quarter is $4,163.4 million. The same for the Performance Materials & Coatings unit is pinned at $2,713 million, suggesting an increase of around 7.4% year over year. Our estimate for the quarter is $2,772.1 million.
Some Factors at Play
Dow is expected to have benefited, in the third quarter, from higher demand across a number of markets including personal care, food packaging and construction. Demand is likely to have been supported by healthy industrial activities. Healthy demand in consumer and industrial end markets and higher prices are expected to have aided its results in the September quarter.
The company is also expected to have gained from cost synergy savings and productivity actions. It remains focused on maintaining cost and operational discipline. Benefits of its restructuring program are also likely to get reflected on the company’s bottom line in the third quarter.
However, the company is expected to have witnessed challenges from higher raw material and energy costs in the third quarter. Raw material and logistical constraints are likely to have persisted in the quarter. Raw material inflation is expected to have affected the company’s Packaging & Specialty Plastics and Industrial Intermediates & Infrastructure segments in the third quarter. The company’s segments are also likely to have been affected by higher energy costs in Europe.
Dow is also likely to have faced headwinds from plant turnaround costs in the September quarter. It sees a headwind of $75 million in its Packaging & Specialty Plastics segment in the third quarter associated with cracker maintenances in Texas, Canada and Argentina. Turnaround costs are expected to have impacted margins in the quarter to be reported.
Dow Inc. Price and EPS Surprise
Dow Inc. price-eps-surprise | Dow Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for Dow this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Dow is 0.00%. The Zacks Consensus Estimate for earnings for the third quarter is currently pegged at $1.07. Our estimate for the quarter is $1.41. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Dow currently carries a Zacks Rank #5 (Strong Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Nov 2, has an Earnings ESP of +8.13% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Albemarle’s third-quarter earnings has been revised 9% upward in the past 60 days. The Zacks Consensus Estimate for ALB’s earnings for the quarter is pegged at $6.81.
Koppers Holdings Inc. (KOP - Free Report) , expected to release earnings on Nov 3, has an Earnings ESP of +2.28% and carries a Zacks Rank #2.
The Zacks Consensus Estimate for Koppers’ third-quarter earnings has been revised 2.6% upward in the past 60 days. The consensus estimate for KOP’s earnings for the quarter is currently pegged at $1.17.
FMC Corporation (FMC - Free Report) , scheduled to release earnings on Nov 1, has an Earnings ESP of +0.30%.
The Zacks Consensus Estimate for FMC's earnings for the third quarter is currently pegged at $1.11. FMC currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.