Dow (DOW) Warms Up to Q1 Earnings: What's in the Offing?
Dow Inc. DOW is scheduled to come up with first-quarter 2023 results before the opening bell on Apr 25.
The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters. DOW delivered a trailing four-quarter earnings surprise of 3.1% on average. It posted a negative earnings surprise of 19.3% in the last reported quarter.
The company is expected to have benefited, in the first quarter, from firm demand across several end markets and its cost and productivity initiatives. However, softness in Europe and Asia and weaker siloxane prices are likely to have affected its performance.
Dow’s shares are down 18.7% over a year compared with 1.1% decline recorded by the industry.
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Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for Dow is currently pegged at $11,501 million, suggesting a decline of around 24.7% year over year.
The Zacks Consensus Estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,708 million, calling for a decline of around 25.2% year over year.
The consensus mark for revenues for the Industrial Intermediates & Infrastructure segment is pegged at $3,491 million, indicating a roughly 29.6% year-over-year decline. The same for the Performance Materials & Coatings unit is pinned at $2,124 million, suggesting a decrease of around 30.3% year over year.
Some Factors at Play
Dow is expected to have gained from cost synergy savings and productivity actions in the March quarter. It remains focused on maintaining cost and operational discipline. Benefits of its restructuring program are also likely to get reflected on the company’s bottom line in the first quarter.
The company is expected to have benefited, in the first quarter, from higher demand across mobility, renewable energy and pharmaceutical markets. It is also witnessing firm global demand in functional polymers and performance silicones. The momentum across these markers is likely to have continued in the first quarter.
However, the company is expected to have faced headwinds from weaker demand in Europe and Asia. Lower consumer spending amid inflationary pressures is likely to have impacted demand in Europe. In Packaging & Specialty Plastics, the company is seeing lower olefins and packaging demand in Europe. Inflationary pressures are also impacting industrial demand and the building and construction market, which is expected to have affected the Industrial Intermediates & Infrastructure segment in the to-be-reported quarter.
The company’s Performance Materials & Coatings unit is also expected to have faced challenges from lower siloxane prices in the March quarter. Siloxane prices fell to their lowest levels at the end of 2022, per DOW. Prices are likely to have remained under pressure in the first quarter due to increased industry supply. The impacts of lower prices might reflect on the segment’s margins in the first quarter.
Dow Inc. Price and EPS Surprise
Dow Inc. price-eps-surprise | Dow Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for Dow this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for Dow is -8.48%. The Zacks Consensus Estimate for earnings for the first quarter is currently pegged at 37 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Dow currently carries a Zacks Rank #3.
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
United States Steel Corporation X, slated to release earnings on Apr 27, has an Earnings ESP of +13.26% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for U.S. Steel’s first-quarter earnings has been revised 124.6% upward in the past 60 days. The Zacks Consensus Estimate for X’s earnings for the quarter is pegged at 57 cents.
Axalta Coating Systems Ltd. AXTA, slated to release earnings on May 2, has an Earnings ESP of +4.35%.
The consensus estimate for Axalta Coating Systems’ earnings for the first quarter is currently pegged at 31 cents. AXTA currently carries a Zacks Rank #3.
Ternium S.A. TX, scheduled to release earnings on Apr 25, has an Earnings ESP of +10.85% and currently carries a Zacks Rank #3.
The Zacks Consensus Estimate for TX’s first-quarter earnings has been revised 58% upward in the past 60 days. The consensus estimate for TX’s earnings for the first quarter is currently pegged at 98 cents.
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United States Steel Corporation (X) : Free Stock Analysis Report
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Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
