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DOW Q3 Earnings Beat Estimates on Pricing Gains and Cost Actions
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Key Takeaways
Dow's Q3 adjusted EPS reached 71 cents versus a year-ago loss of 19 cents, while sales climbed 13% to $11.3B.
Higher prices and self-help benefits lifted Dow's operating EBITDA to $1.55B despite rising input costs.
Dow targets $700M in 2026 transformation benefits and expects roughly $2B in total uplift by 2027.
Dow Inc. (DOW - Free Report) reported third-quarter 2026 adjusted earnings of 71 cents per share, reversing the year-ago loss of 19 cents per share. The improvement was mainly driven by higher prices and benefits from the company's self-help initiatives, which more than offset higher raw material and logistics costs. It beat the Zacks Consensus Estimate of 64 cents.
Net sales rose 13% year over year to around $11.27 billion, beating the Zacks Consensus Estimate of $11.26 billion. Local prices increased 14%, while volume declined 1%, reflecting continued impacts from the Middle East conflict, particularly in Asia Pacific. Currency was flat year over year.
Including significant items, primarily costs associated with the company's self-help initiatives, Dow reported GAAP earnings of 62 cents per share compared with earnings of 8 cents in the year-ago quarter. Significant items reduced third-quarter 2026 earnings by 9 cents per share.
GAAP net income increased to $525 million from $124 million a year ago. Operating EBIT rose to $887 million from $180 million, while operating EBITDA increased to $1.55 billion from $868 million. Higher integrated margins, favorable pricing and productivity benefits supported the improvement despite higher input costs.
Packaging & Specialty Plastics’ sales rose 18% year over year to $5.78 billion. Local prices increased 17%, driven by gains across both businesses in EMEAI and the United States and Canada. Volume increased 1%, primarily reflecting growth in EMEAI. Operating EBIT increased $386 million year over year to $585 million, supported by higher polyethylene prices and self-help benefits, partly offset by increased planned maintenance activity.
Industrial Intermediates & Infrastructure’s sales increased 8% year over year to $3.06 billion. Local prices rose 16%, while volume declined 7% due to weaker demand in Polyurethanes & Construction Chemicals, including impacts from the Middle East conflict. Growth in Industrial Solutions partially offset the decline. Operating EBIT improved to $176 million from a loss of $47 million a year ago, supported by higher margins, self-help benefits and the suspension of recognizing equity losses from Sadara.
Performance Materials & Coatings’ sales advanced 8% year over year to $2.25 billion. Local prices increased 5%, while volume grew 3%, driven by gains across both businesses, particularly downstream silicones. Consumer Solutions benefited from stronger demand across consumer, electronics and home care applications, while Coatings & Performance Monomers recorded higher acrylic monomers and architectural coatings prices and volumes. Operating EBIT increased $74 million year over year to $154 million, aided by pricing gains, higher volumes and cost savings.
DOW's Cash Flow and Financial Position
Cash flow from operating activities for continuing operations reached $1.84 billion, up $709 million year over year and $515 million sequentially. The improvement reflected higher earnings and better working capital management. Free cash flow totaled $1.1 billion, while trailing 12-month cash flow conversion reached 84%.
Cash and cash equivalents stood at $4.14 billion as of Sept. 30, 2026, compared with $3.82 billion at the end of 2025. Dow released more than $400 million in working capital during the quarter and reduced debt by approximately $600 million year to date. Shareholder returns through dividends totaled $253 million during the quarter.
Dow's Outlook
Dow remains on track to deliver $700 million in growth and productivity benefits from its Transform to Outperform program in 2026. Management expects approximately $2 billion in total uplift from the initiative by the end of 2027. Benefits from the company's three planned European asset shutdowns are also expected to build through 2027.
The company expects its collective self-help initiatives to generate more than $1 billion in EBITDA uplift in both 2026 and 2027. Management plans to prioritize growth and innovation in higher-value applications, including AI infrastructure, home and personal care, electronics, flexible packaging and mobility. Dow also intends to strengthen its cost competitiveness by investing in differentiated low-cost operations while shutting down higher-cost upstream capacity.
DOW’s Stock Price Performance
DOW shares have gained 23.9% in the past year compared with the industry’s 2.3% growth.
Image Source: Zacks Investment Research
DOW’s Zacks Rank & Key Picks
DOW currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Reliance, Inc. (RS - Free Report) , Cabot Corporation (CBT - Free Report) and Avient Corporation (AVNT - Free Report) .
The Zacks Consensus Estimate for RS’ 2026 earnings is pegged at $23.7 per share, indicating a 66.2% year-over-year surge. RSshares have gained 53.9% over the past year.
The Zacks Consensus Estimate for CBT’s current fiscal-year earnings is pinned at $6.35 per share. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average surprise of 4.56%. CBTshares have gained 3.8% over the past year.
The Zacks Consensus Estimate for AVNT’s fiscal 2026 earnings is pegged at $3.2 per share, indicating a year-over-year rise of 13.48%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 3.4%.
View the Zacks #1 Rank List
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DOW Q3 Earnings Beat Estimates on Pricing Gains and Cost Actions
Key Takeaways
Dow Inc. (DOW - Free Report) reported third-quarter 2026 adjusted earnings of 71 cents per share, reversing the year-ago loss of 19 cents per share. The improvement was mainly driven by higher prices and benefits from the company's self-help initiatives, which more than offset higher raw material and logistics costs. It beat the Zacks Consensus Estimate of 64 cents.
Net sales rose 13% year over year to around $11.27 billion, beating the Zacks Consensus Estimate of $11.26 billion. Local prices increased 14%, while volume declined 1%, reflecting continued impacts from the Middle East conflict, particularly in Asia Pacific. Currency was flat year over year.
Including significant items, primarily costs associated with the company's self-help initiatives, Dow reported GAAP earnings of 62 cents per share compared with earnings of 8 cents in the year-ago quarter. Significant items reduced third-quarter 2026 earnings by 9 cents per share.
GAAP net income increased to $525 million from $124 million a year ago. Operating EBIT rose to $887 million from $180 million, while operating EBITDA increased to $1.55 billion from $868 million. Higher integrated margins, favorable pricing and productivity benefits supported the improvement despite higher input costs.
Dow Inc. Price, Consensus and EPS Surprise
Dow Inc. price-consensus-eps-surprise-chart | Dow Inc. Quote
DOW's Segment Highlights
Packaging & Specialty Plastics’ sales rose 18% year over year to $5.78 billion. Local prices increased 17%, driven by gains across both businesses in EMEAI and the United States and Canada. Volume increased 1%, primarily reflecting growth in EMEAI. Operating EBIT increased $386 million year over year to $585 million, supported by higher polyethylene prices and self-help benefits, partly offset by increased planned maintenance activity.
Industrial Intermediates & Infrastructure’s sales increased 8% year over year to $3.06 billion. Local prices rose 16%, while volume declined 7% due to weaker demand in Polyurethanes & Construction Chemicals, including impacts from the Middle East conflict. Growth in Industrial Solutions partially offset the decline. Operating EBIT improved to $176 million from a loss of $47 million a year ago, supported by higher margins, self-help benefits and the suspension of recognizing equity losses from Sadara.
Performance Materials & Coatings’ sales advanced 8% year over year to $2.25 billion. Local prices increased 5%, while volume grew 3%, driven by gains across both businesses, particularly downstream silicones. Consumer Solutions benefited from stronger demand across consumer, electronics and home care applications, while Coatings & Performance Monomers recorded higher acrylic monomers and architectural coatings prices and volumes. Operating EBIT increased $74 million year over year to $154 million, aided by pricing gains, higher volumes and cost savings.
DOW's Cash Flow and Financial Position
Cash flow from operating activities for continuing operations reached $1.84 billion, up $709 million year over year and $515 million sequentially. The improvement reflected higher earnings and better working capital management. Free cash flow totaled $1.1 billion, while trailing 12-month cash flow conversion reached 84%.
Cash and cash equivalents stood at $4.14 billion as of Sept. 30, 2026, compared with $3.82 billion at the end of 2025. Dow released more than $400 million in working capital during the quarter and reduced debt by approximately $600 million year to date. Shareholder returns through dividends totaled $253 million during the quarter.
Dow's Outlook
Dow remains on track to deliver $700 million in growth and productivity benefits from its Transform to Outperform program in 2026. Management expects approximately $2 billion in total uplift from the initiative by the end of 2027. Benefits from the company's three planned European asset shutdowns are also expected to build through 2027.
The company expects its collective self-help initiatives to generate more than $1 billion in EBITDA uplift in both 2026 and 2027. Management plans to prioritize growth and innovation in higher-value applications, including AI infrastructure, home and personal care, electronics, flexible packaging and mobility. Dow also intends to strengthen its cost competitiveness by investing in differentiated low-cost operations while shutting down higher-cost upstream capacity.
DOW’s Stock Price Performance
DOW shares have gained 23.9% in the past year compared with the industry’s 2.3% growth.
Image Source: Zacks Investment Research
DOW’s Zacks Rank & Key Picks
DOW currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Reliance, Inc. (RS - Free Report) , Cabot Corporation (CBT - Free Report) and Avient Corporation (AVNT - Free Report) .
RS currently sports a Zacks Rank #1 (Strong Buy), while CBT and AVNT carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for RS’ 2026 earnings is pegged at $23.7 per share, indicating a 66.2% year-over-year surge. RSshares have gained 53.9% over the past year.
The Zacks Consensus Estimate for CBT’s current fiscal-year earnings is pinned at $6.35 per share. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average surprise of 4.56%. CBTshares have gained 3.8% over the past year.
The Zacks Consensus Estimate for AVNT’s fiscal 2026 earnings is pegged at $3.2 per share, indicating a year-over-year rise of 13.48%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 3.4%.