Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We have retained our Neutral recommendation on Dow Chemical (DOW - Analyst Report) following its mixed fourth-quarter 2012 results. Its adjusted earnings for the quarter missed the Zacks Consensus Estimate while revenues beat.

Why Kept at Neutral?

The U.S. chemical giant turned to a wider loss (on a reported basis) in the fourth quarter on hefty restructuring and goodwill impairment charges. Lower pricing and weak market conditions impacted sales in the quarter. However, Dow’s agricultural business was a bright spot with sales increasing at a double-digit clip.

Dow is benefiting from strong fundamentals in agriculture and food markets and is leveraging its North American feedstock advantage. A string of innovative products in its pipeline adds to its strength.

The company remains focused on driving earnings leveraging its feedstock strength and strong momentum in the agricultural sciences business. It also continues to pursue its cost reduction and efficiency programs. Dow targets aggregate cost savings of $2.5 billion with $1 billion expected this year.

Moreover, Dow remains committed to offer incremental returns to its shareholders. It also continues debt repayments while making further investments.

However, Dow continues to witness slowing economic activity, largely due to the beleaguered economic conditions in Europe. Softness across end markets, especially in China, and weak pricing are affecting its results. Weakness in the electronics and construction end-markets may continue in first-quarter 2013.

Moreover, Dow is exposed to significant pension headwinds. The company expects pension costs to increase between $250 million and $300 million in 2013.

Dow currently retains a short-term Zacks Rank #3 (Hold)

Other Stocks to Consider

Other companies in the chemical industry worth considering are Arkema S.A. (ARKAY), BASF SE (BASFY) and Air Products (APD - Analyst Report). While Arkema retains a Zacks Rank #1 (Strong Buy), both BASF and Air Products hold a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%