Dow (DOW) Q1 Earnings, Sales Top Estimates on Higher Prices
Dow Inc. DOW logged earnings (on a reported basis) of $1.32 per share for first-quarter 2021, up from 32 cents per share a year ago.
Barring one-time items, adjusted earnings were $1.36 per share for the reported quarter, topping the Zacks Consensus Estimate of $1.10.
Dow raked in net sales of $11,882 million for the quarter, up roughly 22% year over year. It also surpassed the Zacks Consensus Estimate of $10,827.5 million. Sales rose due to higher local pricing in all operating segments, businesses and regions. Dow saw a 19% year-over-year increase in local prices in the reported quarter. Prices also rose 14% on a sequential comparison basis on gains across all segments.
Volumes were in line with the year-ago quarter as higher demand in Packaging & Specialty Plastics was masked by supply issues in Performance Materials & Coatings and Industrial Intermediates & Infrastructure segments due to disruptions from the winter storm Uri. Notwithstanding the supply limitations, the company saw higher demand, especially in packaging, construction, mobility, electronics and consumer durables end-markets, on the back of continued economic recovery.
Dow Inc. Price, Consensus and EPS Surprise
Dow Inc. price-consensus-eps-surprise-chart | Dow Inc. Quote
Segment Highlights
Packaging & Specialty Plastics: The division’s sales went up 32% year over year to $6.1 billion in the reported quarter on higher volumes and prices, and favorable currency impact. Volumes rose 5% while local prices went up 24% on strong demand. Currency increased sales by 3%.
Industrial Intermediates & Infrastructure: Sales for the unit increased 18% year over year to $3.6 billion. Volumes fell 6%, hurt by temporary production disruptions from Uri in the U.S. Gulf Coast. Local prices rose 21% on the back of increases in consumer durable goods and appliances. Currency increased sales by 3%.
Performance Materials & Coatings: Revenues from the division rose 3% year over year to $2.1 billion. Volumes fell 4% while local price rose 4%. Currency increased sales by 3%. Volumes were hurt by supply issues from Uri that more than offset higher demand for do-it-yourself architectural coatings and differentiated silicone applications.
Financials
Dow had cash and cash equivalents of $4,133 million at the end of the quarter, up around 14% year over year. Long-term debt was $16,200 million, down around 1% year over year.
Cash used in operating activities from continuing operations was $228 million in the reported quarter.
Dow also returned $521 million to shareholders in the first quarter through dividends.
Outlook
Moving ahead, Dow said that it entered the second quarter with increased momentum and expects its businesses to benefit from the ongoing economic recovery, supported by the progress in vaccine distribution and tight market fundamentals. It also expects its capital investments to further support growth in its consumer-led portfolio. The company is well placed for sustained value creation through this year and beyond on the back of its geographic scale, advantaged cost positions, differentiated feedstock flexibility, leadership position in high-growth markets and top-quartile cash generation, Dow noted.
Price Performance
Dow’s shares have rallied 103.6% over a year, compared with a 76.7% rise recorded by the industry.
Zacks Rank & Key Picks
Dow currently sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, Fortescue Metals Group Limited FSUGY and Impala Platinum Holdings Limited IMPUY.
Nucor has a projected earnings growth rate of 171% for the current year. The company’s shares have rallied around 120% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 104.9% for the current fiscal. The company’s shares have shot up around 145% in a year. It currently sports a Zacks Rank #1.
Impala Platinum has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have surged around 284.3% in the past year. It currently carries a Zacks Rank #1.
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