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The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missed once. DOW delivered a trailing four-quarter earnings surprise of 14.1% on average. It posted an earnings surprise of 11.6% in the last reported quarter.
The company is expected to have benefited, in the fourth quarter, from its cost and productivity initiatives. However, soft demand due to weak global economic activities and plant turnaround costs are likely to have affected its performance.
Dow’s shares are down 8% over a year compared with a 17.4% decline recorded by the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for Dow for the fourth quarter is currently pegged at $10,316.3 million, suggesting a decline of around 13% year over year.
Some Factors at Play
Dow is expected to have benefited from cost-saving and productivity actions in the fourth quarter. It remains focused on maintaining cost and operational discipline. The company is realizing a full $300 million EBITDA run rate benefit from restructuring programs being initiated in the third quarter of 2020. DOW is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Benefits of its restructuring program are likely to get reflected on its bottom line in the December quarter.
However, DOW is expected to have faced headwinds from demand softness in Europe and Asia Pacific. Lower consumer spending amid inflationary pressures is likely to have impacted demand in Europe. In the Performance Materials & Coatings segment, the company is seeing softer demand in personal care and coatings applications as well as residential construction.
Softness across these markets is likely to have hurt volumes in this segment in the quarter to be reported. Our estimate for revenues for the Performance Materials & Coatings unit is pinned at $1,959.2 million, suggesting a decline of around 4.8% year over year.
Inflationary pressures are also impacting consumer durables and building and construction demand in Europe. This is likely to have affected the Industrial Intermediates & Infrastructure segment in the December quarter. Our estimate for revenues for the Industrial Intermediates & Infrastructure segment is pegged at $2,858.5 million, indicating a roughly 21.8% year-over-year decline.
In Packaging & Specialty Plastics, weaker consumer demand in Europe is likely to continue to have impacted volumes and sales in this unit. Prices are also expected to have remained under pressure in this segment. Our estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,465.7 million, calling for a decline of 10% year over year.
The company is also likely to have faced headwinds from plant turnaround costs and outages in the fourth quarter. Maintenance turnaround activities at its joint venture in Thailand are expected to have hurt earnings in the Packaging & Specialty Plastics segment in the quarter. The outages at Louisiana are also likely to have impacted its Industrial Intermediates & Infrastructure unit in the fourth quarter.
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 +1.04%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 41 cents. 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 #4 (Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
The consensus estimate for CRS’s earnings for the fiscal second quarter is currently pegged at 85 cents.
Agnico Eagle Mines Limited (AEM - Free Report) , slated to release earnings on Feb 15, has an Earnings ESP of +11.96% and carries a Zacks Rank #3 at present.
The consensus mark for AEM’s fourth-quarter earnings is currently pegged at 46 cents.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +25.00%.
The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
Image: Bigstock
Dow (DOW) Gears Up for Q4 Earnings: What's in the Offing?
Dow Inc. (DOW - Free Report) is scheduled to come up with fourth-quarter 2023 results before the opening bell on Jan 25.
The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missed once. DOW delivered a trailing four-quarter earnings surprise of 14.1% on average. It posted an earnings surprise of 11.6% in the last reported quarter.
The company is expected to have benefited, in the fourth quarter, from its cost and productivity initiatives. However, soft demand due to weak global economic activities and plant turnaround costs are likely to have affected its performance.
Dow’s shares are down 8% over a year compared with a 17.4% decline recorded by the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for Dow for the fourth quarter is currently pegged at $10,316.3 million, suggesting a decline of around 13% year over year.
Some Factors at Play
Dow is expected to have benefited from cost-saving and productivity actions in the fourth quarter. It remains focused on maintaining cost and operational discipline. The company is realizing a full $300 million EBITDA run rate benefit from restructuring programs being initiated in the third quarter of 2020. DOW is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Benefits of its restructuring program are likely to get reflected on its bottom line in the December quarter.
However, DOW is expected to have faced headwinds from demand softness in Europe and Asia Pacific. Lower consumer spending amid inflationary pressures is likely to have impacted demand in Europe. In the Performance Materials & Coatings segment, the company is seeing softer demand in personal care and coatings applications as well as residential construction.
Softness across these markets is likely to have hurt volumes in this segment in the quarter to be reported. Our estimate for revenues for the Performance Materials & Coatings unit is pinned at $1,959.2 million, suggesting a decline of around 4.8% year over year.
Inflationary pressures are also impacting consumer durables and building and construction demand in Europe. This is likely to have affected the Industrial Intermediates & Infrastructure segment in the December quarter. Our estimate for revenues for the Industrial Intermediates & Infrastructure segment is pegged at $2,858.5 million, indicating a roughly 21.8% year-over-year decline.
In Packaging & Specialty Plastics, weaker consumer demand in Europe is likely to continue to have impacted volumes and sales in this unit. Prices are also expected to have remained under pressure in this segment. Our estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,465.7 million, calling for a decline of 10% year over year.
The company is also likely to have faced headwinds from plant turnaround costs and outages in the fourth quarter. Maintenance turnaround activities at its joint venture in Thailand are expected to have hurt earnings in the Packaging & Specialty Plastics segment in the quarter. The outages at Louisiana are also likely to have impacted its Industrial Intermediates & Infrastructure unit in the fourth quarter.
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 +1.04%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at 41 cents. 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 #4 (Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Carpenter Technology Corporation (CRS - Free Report) , scheduled to release earnings on Jan 25, has an Earnings ESP of +0.89% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CRS’s earnings for the fiscal second quarter is currently pegged at 85 cents.
Agnico Eagle Mines Limited (AEM - Free Report) , slated to release earnings on Feb 15, has an Earnings ESP of +11.96% and carries a Zacks Rank #3 at present.
The consensus mark for AEM’s fourth-quarter earnings is currently pegged at 46 cents.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release fourth-quarter earnings on Feb 14, has an Earnings ESP of +25.00%.
The Zacks Consensus Estimate for Kinross' earnings for the fourth quarter is currently pegged at 9 cents. KGC currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.