Yahoo Finance Dow Inc. (DOW) Down 2.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Dow Inc. (DOW). Shares have lost about 2.4% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Dow’s Earnings and Revenues Trounce Estimates in Q1
Dow recorded a loss (on a reported basis) of $93 million or 13 cents per share in first-quarter 2023 compared with a profit of $1,569 million or $2.11 per share a year ago.
Barring one-time items, adjusted earnings were 58 cents per share for the reported quarter, down from $2.34 a year ago. The figure topped the Zacks Consensus Estimate of 37 cents.
Dow recorded net sales of $11,851 million for the quarter, down roughly 22% year over year. It also surpassed the Zacks Consensus Estimate of $11,338.2 million. The company saw lower sales across its segments in the quarter due to weaker macroeconomic activity globally. The top line was hurt by lower local pricing, reduced volumes and unfavorable currency translation.
The company saw a 10% year-over-year decline in local prices in the reported quarter. Prices also fell 4% on a sequential comparison basis. Volumes were down 11% year over year driven by a 15% decline Europe, the Middle East, Africa, and India.
Segment Highlights
Packaging & Specialty Plastics: The division’s sales fell 20% year over year to $6.1 billion in the reported quarter. Volumes were down 8% year-over-year while local prices fell 11% as gains in functional polymers were more than offset by reduced polyethylene and olefin prices. Currency reduced sales by 1%.
Industrial Intermediates & Infrastructure: Sales for the unit tumbled 25% year over year to $3.4 billion. Local prices fell 6% in the quarter. Volumes declined 17% on lower demand in industrial, consumer durables, and building and construction applications. Currency reduced sales by 2%.
Performance Materials & Coatings: Revenues from the division declined 25% year over year to $2.3 billion. Volumes fell 11% while local price went down 12%. Volumes were impacted by declines in all regions. Currency reduced sales by 2%.
Financials
Dow had cash and cash equivalents of $3,319 million at the end of the quarter, up around 6% year over year. Long-term debt was $14,739 million, up around 4% year over year.
Cash provided by operating activities from continuing operations was $531 million in the reported quarter.
Dow also returned $621 million to shareholders in the quarter through dividends and share buybacks.
Outlook
Moving ahead, Dow said that its disciplined execution has enhanced its ability to navigate the impact of higher inflation on consumer demand and weak global economic activity through the balance of 2023. The company expects continued benefits of its operational and cost actions as it progresses through the year. It is making progress with its actions to deliver $1 billion in cost savings in 2023. Dow is benefiting from its advantaged feedstock positions. It expects oil and gas spreads to further support its strategic cost-advantaged positions.
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 -12.38% due to these changes.
VGM Scores
Currently, Dow Inc. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Outlook
Estimates have been 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Dow Inc. (DOW) : Free Stock Analysis Report
