Headquartered in Midland, Michigan, Dow Inc. (DOW) is a material science company with a market cap of $37.9 billion. It offers a portfolio of advanced, sustainable products with a diverse range of high-value functional polymers, low-cost global feedstock, and manufacturing sites worldwide.
Shares of Dow have underperformed the broader market considerably over the past year. DOW has surged 1.1% over this time frame, while the broader S&P 500 Index ($SPX) is up 26.1%. In 2024, the stock is down 1.7%, compared to SPX’s 16.5% return on a YTD basis.
Narrowing the focus, DOW has also lagged behind the Materials Select Sector SPDR Fund’s (XLB) 11.8% returns over the past year and 5.9% gains on a YTD basis.
Dow's underperformance compared to the broader market is due to a challenging market environment over the past year, characterized by declining selling prices and weak demand in some sectors. Additionally, the company encountered difficulties in Europe, where consumer spending and industrial activity were dampened by persistent geopolitical tensions.
On July 25, Dow reported its Q2 earnings, leading to a marginal dip in its stock as results fell short of Wall Street expectations. While volumes increased by 1% year over year, driven by gains in the U.S. and Canada, marking the third consecutive quarter of volume growth. However, local prices declined by 4% year over year during the quarter. Dow also encountered challenges from weaker demand in Europe and Asia.
For the current fiscal year, ending in December, analysts expect DOW’s EPS to expand 17.4% year over year to $2.63. The company’s earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on one other occasion.
Dow stock has a consensus “Moderate Buy” rating overall. Out of 19 analysts covering the stock, four advise a "Strong Buy," and 15 suggest a "Hold."
This configuration has been fairly consistent over the past months.
On July 26, Mizuho reduced its price target on Dow to $60 from $62 and maintained a “Neutral” rating following the Q2 report. The firm noted that Dow has acknowledged a slower-than-expected pace of global macroeconomic recovery.
The mean price target of $58.21 suggests an 8% premium to DOW from current levels. The Street-high target of $64 represents an impressive upside potential of 18.7%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
