A month has gone by since the last earnings report for Dow Inc. (DOW Quick QuoteDOW - Free Report) . Shares have lost about 18.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Dow Inc. due for a breakout? 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 catalysts.

Dow’s Q4 Earnings and Revenues Surpass Estimates

Dow recorded loss (on a reported basis) from continuing operations of $3.14 per share for fourth-quarter 2019 against earnings of 63 cents per share a year ago.

Barring one-time items including hefty restructuring, goodwill impairment and asset-related charges, earnings were 78 cents per share for the reported quarter, ahead of the Zacks Consensus Estimate of 74 cents.

The company benefited from its actions to reduce costs and contributions from its U.S. Gulf Coast investments in the quarter.

Dow raked in net sales of $10,204 million for the quarter, down roughly 15% from the adjusted sales a year ago. It, however, beat the Zacks Consensus Estimate of $10,015.4 million.

Sales fell due to lower local pricing resulting from a decline in global energy prices. Currency reduced sales by 1% in the quarter.

Volumes fell 2% in the quarter, affected by lower hydrocarbon co-product sales due to a planned turnaround activity in Europe. The company also saw a 12% decline in local prices.

Full-Year Results

For 2019, loss from continuing operations was $2.42 per share against earnings of $3.80 per share a year ago. Revenues were $42,951 million for the full year, down around 13% year over year.

Segment Highlights

Packaging & Specialty Plastics: The division’s sales fell 18% from the adjusted sales a year ago to $4.8 billion in the reported quarter. Volumes fell 3% while local prices slipped 14%. Currency also reduced sales by 1%.

Industrial Intermediates & Infrastructure: Sales for the unit fell 14% to $3.3 billion. Volumes were flat while local prices fell 13%. Currency lowered sales by 1%.

Performance Materials & Coatings: Revenues from the division went down 10% to $2 billion. Sales were impacted by volumes and local price declines of 1% and 8%, respectively. Currency also reduced sales by 1%.

Financials
 
Dow had cash and cash equivalents of $2,367 million at the end of 2019, down 13% year over year. Long-term debt was $15,975 million, down 17% year over year.

Cash provided by operating activities from continuing operations was $1.9 billion in the reported quarter while free cash flow was $1.3 billion.

Dow returned $611 million to shareholders in the fourth quarter through dividend and share repurchase. It achieved its share buyback target of $500 million for the full year.

Outlook

Looking ahead, Dow said that it will remain focused on advancing its investments in higher-return growth projects, especially in sectors where it is seeing favorable demand conditions. The company also expects to retain its competitive cost positions by leveraging its unique feedstock capabilities.

Dow also expects to further reduce its cost structure over the course of 2020 as it completes the stranded cost removal.
 

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months. The consensus estimate has shifted -6.05% due to these changes.

VGM Scores

Currently, Dow Inc. has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Dow Inc. has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.