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Dow Inc. Earnings Preview: EPS and Revenue Concerns Loom

A report highlights Dow Inc.'s upcoming earnings report, with expected EPS and revenue indicating potential declines, reflecting challenges and analyst concerns amidst a lagging stock performance compared to industry peers.

Date: 
AI Rating:   4

Dow Inc. (DOW) is under scrutiny as the investment community anticipates its upcoming earnings report on October 24, 2024. The expected earnings per share (EPS) of $0.46 reflects a decline of 4.17% from the prior-year quarter. Additionally, the projected revenue of $10.73 billion signifies a minimal decline of 0.04% compared to the corresponding period last year.

For the fiscal year, the consensus estimates indicate earnings of $2.32 per share, which represents a moderate increase of +3.57% from the prior year. However, the expected revenue of $42.88 billion reflects a larger decline of -3.91% year-over-year. These figures suggest that while earnings may experience a slight rise over the longer term, revenue growth is stagnating, which could concern investors looking for robust growth.

Furthermore, the report highlights that Dow Inc.'s stock has gained only 0.36% over the past month, significantly trailing behind the Basic Materials sector’s gain of 7.19% and the S&P 500's gain of 3.76%. This underperformance could severely affect investor sentiment and stock price movements, as market players usually prefer stocks exhibiting stronger growth relative to their peers.

A crucial factor for investors is the recent changes in analysts' estimates, which are closely monitored and often influence stock price performance. A noted decrease of 6.45% in the Zacks Consensus EPS estimate over the last 30 days reflects unfavorable sentiments among analysts, which is further underscored by Dow Inc.'s current Zacks Rank of #5 (Strong Sell).

In terms of valuation, Dow Inc. is trading at a Forward P/E ratio of 22.86, which is relatively high compared to its industry average of 18.9. Investors could perceive this premium as unjustified amid declining revenues and challenging growth prospects. Moreover, the PEG ratio of 1.1 is marginally better than the industry average of 1.27, indicating some level of expected growth, but the overall sentiment remains muted.

The outlook for Dow Inc. must also account for its position within the Chemical - Diversified industry, rated 208 out of over 250 industries, and reflecting a position in the bottom 18%. This rating suggests further challenges for the company amidst intensified competition and market dynamics. Overall, the information points towards a cautious stand for investors regarding Dow Inc.'s upcoming performance.

Stocks:  DOW