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Dow Inc. (DOW - Free Report) is a Zacks #1 (Strong Buy) that is a material science company. Dow provides a portfolio of advanced, sustainable and leading-edge products for consumer care, infrastructure and packaging markets.
The stock has grinded higher over the last year and now sits just below 52-week highs. A recent earnings report helped the stock move higher and analysts are hiking estimates for the upcoming year.
About the Company
Dow is headquartered in Midland, Michigan and was incorporated in 2018. The company has a long history under the DowDuPont name and is currently a component of the Dow Jones Industrial Average.
Dow has a market cap of $48 Billion and has Zacks Style Scores of “B” in Value, but “F” in Momentum. The Forward PE is 15 and the company pays a dividend of 4.3%.
Q4 Earnings and Guidance
Dow reported Q4 earnings in late January seeing a top line beat and a 17% earnings surprise to the upside. The company also guided Q1 revenue above expectations. Their outlook for 2021 was that the company was entering the year with sequential momentum and will be well-positioned for continued profitable growth. Dow expects that as the recovery widens, they will see an increase in margins and improving demand.
That bullish idea in late January came to fruition as the company guided Q1 EBITDA above expectations on March 16th. At a JPMorgan Conference, Dow said it now sees EDITDA $50-100M higher despite the bad weather conditions. Moreover, Q2 EBITDA will come in at least $300-400M above consensus as market demand will strengthen. The company added they expect the global economic recovery to drive tailwinds into the end of the year.
Estimates
The bullish tone from the guidance has forced analysts to hike their estimates.
Over the last 30 days, earnings estimates have jumped higher across most time frames. For the next quarter, we have seen estimates raised by 28%, from $0.98 to $1.25. For the current year, we have seen a 17% move higher in that same time frame.
Analysts are commenting that the acceleration of the vaccine rollout, combined with the stimulus package should lead to strong demand. More specifically to the petrochemicals sector, strong demand, elevated margins and tight supply/demand dynamics will help Dow benefit.
The Technicals
The march panic gave investors a rare opportunity as the stock fell to the low $20s. Since then, DOW has slowly rallied to 52-week highs above the $67 level. The stock has pretty much held the 50-day moving average, which is currently at the $60 level, the whole way up. If the stock were to break this technical level, bargain hunters should watch the 200-day, which is all the way down at $51.50.
Unless we see a large market pullback, that drop in price seems unlikely. For those looking to buy now, they can look to the Fibs for a price target. A Fibonacci retracement drawn from 2020 highs to lows, gives us an 161.8% extension target at $75. This target comes just shy of Wells Fargo’s recent reiteration of their $80 price target.
Bottom Line
Dow doesn’t have a lot of eyeballs on it, which makes it a sneaky play the rest of the year. It won’t move like a tech stock, but its up 25% off 2020 lows and 25% away from Wells Fargo’s targets. This sets up for an acceptable risk reward with a company that pays a dividend over 4%.
5G Revolution: 3 Stocks to Make Your Move
With super high data speed, it will make current cell phones obsolete and unlock the full potential of big data, cloud computing, and artificial intelligence. In the next few years this industry is predicted to create 22 million jobs and a stunning $12.3 trillion in revenue.
Today you have an historic chance to pursue almost unimaginable gains like Microsoft, Netflix, and Apple in their early phases. Zacks has released a Special Report that reveals our . . .
??? Smartest stock for 5G telecom ??? Safest investment in 5G hardware ??? Single best 5G buy of all!
Bull of the Day: Dow Inc (DOW)
Dow Inc. (DOW - Free Report) is a Zacks #1 (Strong Buy) that is a material science company. Dow provides a portfolio of advanced, sustainable and leading-edge products for consumer care, infrastructure and packaging markets.
The stock has grinded higher over the last year and now sits just below 52-week highs. A recent earnings report helped the stock move higher and analysts are hiking estimates for the upcoming year.
About the Company
Dow is headquartered in Midland, Michigan and was incorporated in 2018. The company has a long history under the DowDuPont name and is currently a component of the Dow Jones Industrial Average.
Dow has a market cap of $48 Billion and has Zacks Style Scores of “B” in Value, but “F” in Momentum. The Forward PE is 15 and the company pays a dividend of 4.3%.
Q4 Earnings and Guidance
Dow reported Q4 earnings in late January seeing a top line beat and a 17% earnings surprise to the upside. The company also guided Q1 revenue above expectations. Their outlook for 2021 was that the company was entering the year with sequential momentum and will be well-positioned for continued profitable growth. Dow expects that as the recovery widens, they will see an increase in margins and improving demand.
That bullish idea in late January came to fruition as the company guided Q1 EBITDA above expectations on March 16th. At a JPMorgan Conference, Dow said it now sees EDITDA $50-100M higher despite the bad weather conditions. Moreover, Q2 EBITDA will come in at least $300-400M above consensus as market demand will strengthen. The company added they expect the global economic recovery to drive tailwinds into the end of the year.
Estimates
The bullish tone from the guidance has forced analysts to hike their estimates.
Over the last 30 days, earnings estimates have jumped higher across most time frames. For the next quarter, we have seen estimates raised by 28%, from $0.98 to $1.25. For the current year, we have seen a 17% move higher in that same time frame.
Analysts are commenting that the acceleration of the vaccine rollout, combined with the stimulus package should lead to strong demand. More specifically to the petrochemicals sector, strong demand, elevated margins and tight supply/demand dynamics will help Dow benefit.
The Technicals
The march panic gave investors a rare opportunity as the stock fell to the low $20s. Since then, DOW has slowly rallied to 52-week highs above the $67 level. The stock has pretty much held the 50-day moving average, which is currently at the $60 level, the whole way up. If the stock were to break this technical level, bargain hunters should watch the 200-day, which is all the way down at $51.50.
Unless we see a large market pullback, that drop in price seems unlikely. For those looking to buy now, they can look to the Fibs for a price target. A Fibonacci retracement drawn from 2020 highs to lows, gives us an 161.8% extension target at $75. This target comes just shy of Wells Fargo’s recent reiteration of their $80 price target.
Bottom Line
Dow doesn’t have a lot of eyeballs on it, which makes it a sneaky play the rest of the year. It won’t move like a tech stock, but its up 25% off 2020 lows and 25% away from Wells Fargo’s targets. This sets up for an acceptable risk reward with a company that pays a dividend over 4%.
5G Revolution: 3 Stocks to Make Your Move
With super high data speed, it will make current cell phones obsolete and unlock the full potential of big data, cloud computing, and artificial intelligence. In the next few years this industry is predicted to create 22 million jobs and a stunning $12.3 trillion in revenue.
Today you have an historic chance to pursue almost unimaginable gains like Microsoft, Netflix, and Apple in their early phases. Zacks has released a Special Report that reveals our . . .
??? Smartest stock for 5G telecom
??? Safest investment in 5G hardware
??? Single best 5G buy of all!
Download now. Today the report is FREE >>