A month has gone by since the last earnings report for Dow Inc. (
DOW Quick Quote DOW - Free Report) . Shares have added about 8.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Dow Inc. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Dow's Earnings and Revenues Top Estimates in Q3
Dow recorded earnings (on a reported basis) of 42 cents per share in third-quarter 2023, down from $1.02 per share a year ago.
Barring one-time items, adjusted earnings were 48 cents per share for the reported quarter, down from $1.11 a year ago. The figure topped the Zacks Consensus Estimate of 43 cents. Dow recorded net sales of $10.73 billion for the quarter, down roughly 24% year over year. It also surpassed the Zacks Consensus Estimate of $10.68 billion. The company saw lower sales across its segments in the quarter, hurt by weaker macroeconomic activities. The top line was affected by lower local pricing and reduced volumes. The company saw an 18% year-over-year decline in local prices in the reported quarter on declines in all segments and regions. Prices also fell 7% on a sequential comparison basis. Volumes were down 6% year over year driven by lower merchant hydrocarbons and energy volumes. Segment Highlights Packaging & Specialty Plastics: The division’s sales fell 26% year over year to $5.45 billion in the reported quarter. Volumes were down 7% year over year while local prices fell 20% due to reduced polyethylene and olefin prices. Industrial Intermediates & Infrastructure: Sales for the unit tumbled 25% year over year to $3.04 billion. Local prices fell 17% in the quarter. Volumes declined 7% on lower global demand. Performance Materials & Coatings: Revenues from the division declined 20% year over year to $2.13 billion. Volumes fell 3% while local price went down 17%. Volumes were impacted by weaker demand for personal care and coatings applications in residential construction, which more than offset gains in commercial building and construction end markets. Financials
Dow had cash and cash equivalents of $3.08 billion at the end of the quarter, up around 39% year over year. Long-term debt was $14.59 billion, up around 13% year over year.
Cash provided by operating activities from continuing operations was $1.7 billion in the reported quarter. Dow also returned $617 million to shareholders in the quarter through dividends and share buybacks. Outlook
Moving ahead, Dow said that it remains focused on operational and financial discipline as it navigates challenging market conditions. It expects to benefit from rising oil prices that favor its cost-advantaged asset footprint.
The company continues to implement targeted actions to deliver $1 billion in cost savings this year. It also remains committed to its disciplined and balanced capital allocation priorities. It expects its Decarbonize and Grow and Transform the Waste strategies to generate more than $3 billion in underlying earnings, lower greenhouse gas emissions by 5 million metric tons and commercialize 3 million metric tons of circular and renewable solutions annually by 2030. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -25.53% due to these changes.
At this time, Dow Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Dow Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.