Dow's (DOW) Earnings and Revenues Top Estimates in Q2
Dow Inc. DOW recorded earnings (on a reported basis) of 68 cents per share in second-quarter 2023, down from $2.26 per share a year ago.
Barring one-time items, adjusted earnings were 75 cents per share for the reported quarter, down from $2.31 a year ago. The figure topped the Zacks Consensus Estimate of 70 cents.
Dow recorded net sales of $11,420 million for the quarter, down roughly 27% year over year. It also surpassed the Zacks Consensus Estimate of $11,368.9 million. The company saw lower sales across its segments in the quarter, hurt by softer demand and prices due to weaker macroeconomic activities. The top line was affected by lower local pricing and reduced volumes.
The company saw an 18% year-over-year decline in local prices in the reported quarter. Prices also fell 5% on a sequential comparison basis. Volumes were down 8% year over year driven by a 14% decline Europe, the Middle East, Africa and India.
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 fell 28% year over year to $5,940 million in the reported quarter. The figure fell short of our estimate of $6,142.6 million. Volumes were down 7% year over year while local prices fell 21% due to reduced ethylene and polyethylene prices.
Industrial Intermediates & Infrastructure: Sales for the unit tumbled 27% year over year to $3,177 million. The figure was lower than our estimate of $3,397.6 million. Local prices fell 15% in the quarter. Volumes declined 11% on lower demand in industrial, consumer durables, and building and construction applications.
Performance Materials & Coatings: Revenues from the division declined 27% year over year to $2,197 million. The figure fell short of our estimate of $2,342.1 million. Volumes fell 10% while local price went down 16%. Volumes were impacted by declines in all regions and businesses.
Financials
Dow had cash and cash equivalents of $2,924 million at the end of the quarter, up around 24% year over year. Long-term debt was $14,735 million, up around 13% year over year.
Cash provided by operating activities from continuing operations was more than $1.3 billion in the reported quarter.
Dow also returned $743 million to shareholders in the quarter through dividends and share buybacks.
Outlook
Moving ahead, Dow said that it remains focused on cost-savings actions and will continue to advance its longer-term strategic priorities as it faces a challenging macroeconomic environment in the second half of 2023. It is making progress with its actions to deliver $1 billion in cost savings in 2023. Its disciplined and balanced capital allocation priorities are supporting its “Decarbonize and Grow” strategy to deliver long-term value creation for its shareholders, the company noted.
The company expects net sales in the band of roughly $10.25-$10.75 billion for the third quarter.
Price Performance
Shares of Dow are up 2.4% over a year compared with the industry’s 11.7% rise.
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Zacks Rank & Key Picks
Dow currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth a look in the basic materials space include PPG Industries, Inc. PPG, Carpenter Technology Corporation CRS and Silvercorp Metals Inc. SVM.
PPG Industries currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for PPG's current-year earnings has been revised 0.8% upward over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.3%, on average. PPG shares have gained around 16% in a year.
The Zacks Consensus Estimate for current-year earnings for CRS is currently pegged at $1.04, implying year-over-year growth of 198.1%. Carpenter Technology currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 30.9%, on average. The stock has gained around 96% in a year.
Silvercorp Metals currently carries a Zacks Rank #2 (Buy). The consensus estimate for current fiscal-year earnings for SVM is currently pegged at 26 cents, suggesting year-over-year growth of 23.8%.
Silvercorp Metals has a trailing four-quarter earnings surprise of roughly 12.5%, on average The stock has rallied roughly 30% in the past year.
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