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Here's What Makes Dow (DOW) Stock a Solid Bet Right Now
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Dow Inc.’s (DOW - Free Report) stock looks promising at the moment. It is benefiting from cost synergy savings and productivity initiatives, strong demand across a number of major markets and investment in high-return projects.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Dow currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make Dow an attractive choice for investors right now.
Estimates Going Up
Over the past two months, the Zacks Consensus Estimate for Dow for the current year has increased 7.2%. The consensus estimate for fourth-quarter 2021 has also been revised 13% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Positive Earnings Surprise History
Dow has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an average earnings surprise of roughly 14.1%.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for the current year for Dow is currently pegged at $9.08, reflecting an expected year-over-year growth of 447%. Moreover, earnings are expected to register a 179% growth in the fourth quarter of 2021. The company also has an expected long-term earnings per share growth rate of 30.1%, above the industry average of 19.6%.
Valuation Looks Attractive
Dow’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Dow is currently trading at trailing 12-month EV/EBITDA multiple of 5.72, cheaper compared with the industry average of 9.2.
Growth Drivers in Place
Dow is seeing higher demand across a number of markets including mobility, personal care, electronics and construction amid the ongoing economic recovery. It is also benefiting from strong demand for its materials across healthcare and packaging markets, thanks to the coronavirus pandemic. The pandemic has led to a surge in demand for health, hygiene and safety products. Dow, in its third-quarter call, said that it expects strong end-market demand to continue into 2022.
The company should also gain from cost synergy savings and productivity actions. It focuses on maintaining cost and operational discipline. It expects to realize around $300 million annualized EBITDA benefit from a restructuring program being initiated in the third quarter of 2020. Dow expects the restructuring program to be substantially complete by end-2021.
Dow also remains focused on investing in attractive areas through highly accretive projects. It is investing in several high-return growth projects including the expansion of downstream silicones capacity. It is executing a number of downstream silicones expansion projects.
The company is also committed to return value to its shareholders by leveraging healthy cash flows. It generated cash flow from operating activities of $2.7 billion and returned $918 million to its shareholders in the third quarter of 2021 through dividends and share repurchases.
Huntsman has a projected earnings growth rate of 258.2% for the current year. The Zacks Consensus Estimate for HUN’s current-year earnings has been revised 11.8% upward over the last 60 days.
Huntsman beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.8%. HUN shares have gained around 34% in a year.
Univar has a projected earnings growth rate of 55.2% for the current year. UNVR's consensus estimate for the current year has been revised 9% upward over the last 60 days.
Univar beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.1%. UNVR has rallied around 67% in a year.
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 12.9% upward over the last 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 50% in a year.
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Here's What Makes Dow (DOW) Stock a Solid Bet Right Now
Dow Inc.’s (DOW - Free Report) stock looks promising at the moment. It is benefiting from cost synergy savings and productivity initiatives, strong demand across a number of major markets and investment in high-return projects.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Dow currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.
Let’s delve deeper into the factors that make Dow an attractive choice for investors right now.
Estimates Going Up
Over the past two months, the Zacks Consensus Estimate for Dow for the current year has increased 7.2%. The consensus estimate for fourth-quarter 2021 has also been revised 13% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Positive Earnings Surprise History
Dow has outpaced the Zacks Consensus Estimate in each of the trailing four quarters. In this time frame, it has delivered an average earnings surprise of roughly 14.1%.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for the current year for Dow is currently pegged at $9.08, reflecting an expected year-over-year growth of 447%. Moreover, earnings are expected to register a 179% growth in the fourth quarter of 2021. The company also has an expected long-term earnings per share growth rate of 30.1%, above the industry average of 19.6%.
Valuation Looks Attractive
Dow’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value chemical stocks, Dow is currently trading at trailing 12-month EV/EBITDA multiple of 5.72, cheaper compared with the industry average of 9.2.
Growth Drivers in Place
Dow is seeing higher demand across a number of markets including mobility, personal care, electronics and construction amid the ongoing economic recovery. It is also benefiting from strong demand for its materials across healthcare and packaging markets, thanks to the coronavirus pandemic. The pandemic has led to a surge in demand for health, hygiene and safety products. Dow, in its third-quarter call, said that it expects strong end-market demand to continue into 2022.
The company should also gain from cost synergy savings and productivity actions. It focuses on maintaining cost and operational discipline. It expects to realize around $300 million annualized EBITDA benefit from a restructuring program being initiated in the third quarter of 2020. Dow expects the restructuring program to be substantially complete by end-2021.
Dow also remains focused on investing in attractive areas through highly accretive projects. It is investing in several high-return growth projects including the expansion of downstream silicones capacity. It is executing a number of downstream silicones expansion projects.
The company is also committed to return value to its shareholders by leveraging healthy cash flows. It generated cash flow from operating activities of $2.7 billion and returned $918 million to its shareholders in the third quarter of 2021 through dividends and share repurchases.
Dow Inc. Price and Consensus
Dow Inc. price-consensus-chart | Dow Inc. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Huntsman Corporation (HUN - Free Report) , Univar Solutions Inc. and Nutrien Ltd. (NTR - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntsman has a projected earnings growth rate of 258.2% for the current year. The Zacks Consensus Estimate for HUN’s current-year earnings has been revised 11.8% upward over the last 60 days.
Huntsman beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.8%. HUN shares have gained around 34% in a year.
Univar has a projected earnings growth rate of 55.2% for the current year. UNVR's consensus estimate for the current year has been revised 9% upward over the last 60 days.
Univar beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 24.1%. UNVR has rallied around 67% in a year.
Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 12.9% upward over the last 60 days.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 50% in a year.