DOW Gears Up for Q2 Earnings: What's in the Cards for the Stock?
DOW surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed twice. It has a trailing four-quarter earnings surprise of 24.2% on average. Dow posted an earnings surprise of 200% in the last reported quarter.
While DOW is expected to have benefited from its productivity initiatives, soft demand due to weak global economic activities and pricing pressures are likely to have affected its second-quarter performance.
Dow's shares are down 44.4% over a year compared with the Zacks Chemicals Diversified industry's 18.4% decline.
Let's see how things are shaping up for this announcement.
What Do DOW's Revenue Estimates Say?
The Zacks Consensus Estimate for revenues for DOW for the to-be-reported quarter is pinned at $10,445.6 million, suggesting a year-over-year decline of 4.6%.
Our estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,197.9 million, calling for a decline of 5.8% year over year. The same for the Industrial Intermediates & Infrastructure segment stands at $2,884.6 million, indicating a 2.3% year-over-year decline.
Our estimate for revenues for the Performance Materials & Coatings segment is pinned at $2,142.1 million, suggesting a fall of 4.5% year over year.
Factors Shaping DOW's Q2 Results
Dow is expected to have faced headwinds from demand softness in Europe and China in the quarter to be reported. Lower consumer spending amid inflationary pressures is affecting demand in Europe. Construction and manufacturing activities remain soft in the region. Demand in Asia has been affected by a weaker demand recovery in China. The property sector in China remains sluggish, with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure, including residential construction, also remains weak. Dow sees softness in automotive in Europe due to low demand. Soft conditions across these markets are likely to have weighed on DOW's volumes in the second quarter. Weak macroeconomic conditions due to disruptions caused by tariffs are expected to have affected business and consumer sentiment.
Dow is also being challenged by weak siloxane prices in its Performance Materials & Coatings unit. The segment continues to see siloxane pricing pressure partly due to supply additions in Asia. Siloxane prices remain under pressure due to competitive pricing pressure resulting from additional supply driven by capacity additions in China. While capacity additions have slowed, elevated industry supply is expected to continue to have impacted prices in the second quarter.
Nevertheless, Dow is likely to have benefited from cost-saving and productivity actions. DOW is implementing targeted actions focused on reducing direct costs and labor costs. It is taking action to cut costs by $1 billion to drive margins. Dow sees around $300 million in benefits from these actions in 2025, with full benefits expected by 2026. The benefits of DOW's cost-saving actions are likely to be reflected in its bottom line in the to-be-reported quarter.
Dow Inc. Price and EPS Surprise
Dow Inc. price-eps-surprise | Dow Inc. Quote
What Our Model Unveils for DOW Stock
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 -53.04%. The Zacks Consensus Estimate for the second quarter is currently pegged at a loss of 8 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 #5 (Strong Sell).
Basic Materials Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Agnico Eagle Mines Limited AEM, scheduled to release earnings on July 30, has an Earnings ESP of +8.77% and carries a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
The consensus estimate for AEM's earnings for the second quarter is currently pegged at $1.66.
Newmont Corporation NEM, slated to release earnings on July 24, has an Earnings ESP of +4.42% and carries a Zacks Rank #2 at present.
The consensus mark for NEM's second-quarter earnings is currently pegged at $1.05.
Kinross Gold Corporation KGC, scheduled to release earnings on July 30, has an Earnings ESP of +15.34%.
The Zacks Consensus Estimate for KGC's earnings for the second quarter is currently pegged at 27 cents. KGC currently carries a Zacks Rank #1.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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Dow Inc. (DOW): Free Stock Analysis Report
Newmont Corporation (NEM): Free Stock Analysis Report
Kinross Gold Corporation (KGC): Free Stock Analysis Report
Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report
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