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Dow Inc. (DOW) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Dow Inc. (DOW - Free Report) ? Shares have been on the move with the stock up 8.5% over the past month. The stock hit a new 52-week high of $71.86 in the previous session. Dow Inc. has gained 22.6% since the start of the year compared to the 11.3% move for the Zacks Basic Materials sector and the -2.6% return for the Zacks Chemical - Diversified industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 21, 2022, Dow Inc. reported EPS of $2.34 versus consensus estimate of $2.02 while it beat the consensus revenue estimate by 5.37%.
For the current fiscal year, Dow Inc. is expected to post earnings of $7.31 per share on $56.59 billion in revenues. This represents a -18.6% change in EPS on a 2.96% change in revenues. For the next fiscal year, the company is expected to earn $7.08 per share on $55.89 billion in revenues. This represents a year-over-year change of -3.12% and -1.25%, respectively.
Valuation Metrics
Dow Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Dow Inc. has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 9.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.1X. On a trailing cash flow basis, the stock currently trades at 5.4X versus its peer group's average of 7.1X. Additionally, the stock has a PEG ratio of 0.32. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Dow Inc. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Dow Inc. fits the bill. Thus, it seems as though Dow Inc. shares could have potential in the weeks and months to come.
How Does DOW Stack Up to the Competition?
Shares of DOW have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Kronos Worldwide Inc (KRO - Free Report) . KRO has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Kronos Worldwide Inc beat our consensus estimate by 3.70%, and for the current fiscal year, KRO is expected to post earnings of $1.28 per share on revenue of $2.11 billion.
Shares of Kronos Worldwide Inc have gained 0.4% over the past month, and currently trade at a forward P/E of 12.77X and a P/CF of 11.06X.
The Chemical - Diversified industry may rank in the bottom 60% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for DOW and KRO, even beyond their own solid fundamental situation.
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Dow Inc. (DOW) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Dow Inc. (DOW - Free Report) ? Shares have been on the move with the stock up 8.5% over the past month. The stock hit a new 52-week high of $71.86 in the previous session. Dow Inc. has gained 22.6% since the start of the year compared to the 11.3% move for the Zacks Basic Materials sector and the -2.6% return for the Zacks Chemical - Diversified industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 21, 2022, Dow Inc. reported EPS of $2.34 versus consensus estimate of $2.02 while it beat the consensus revenue estimate by 5.37%.
For the current fiscal year, Dow Inc. is expected to post earnings of $7.31 per share on $56.59 billion in revenues. This represents a -18.6% change in EPS on a 2.96% change in revenues. For the next fiscal year, the company is expected to earn $7.08 per share on $55.89 billion in revenues. This represents a year-over-year change of -3.12% and -1.25%, respectively.
Valuation Metrics
Dow Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Dow Inc. has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 9.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.1X. On a trailing cash flow basis, the stock currently trades at 5.4X versus its peer group's average of 7.1X. Additionally, the stock has a PEG ratio of 0.32. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Dow Inc. currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Dow Inc. fits the bill. Thus, it seems as though Dow Inc. shares could have potential in the weeks and months to come.
How Does DOW Stack Up to the Competition?
Shares of DOW have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Kronos Worldwide Inc (KRO - Free Report) . KRO has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Kronos Worldwide Inc beat our consensus estimate by 3.70%, and for the current fiscal year, KRO is expected to post earnings of $1.28 per share on revenue of $2.11 billion.
Shares of Kronos Worldwide Inc have gained 0.4% over the past month, and currently trade at a forward P/E of 12.77X and a P/CF of 11.06X.
The Chemical - Diversified industry may rank in the bottom 60% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for DOW and KRO, even beyond their own solid fundamental situation.