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The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters at an average of around 11.4%. It posted an earnings surprise of roughly 19.2% in the last reported quarter.
While DOW is expected to have benefited from its cost and productivity initiatives, soft demand due to weak global economic activities and plant turnaround costs are likely to have affected its second-quarter performance.
Dow’s shares are up 3.6% over a year compared with a 9.4% decline recorded by the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for Dow for the second quarter is currently pegged at $11,000.6 million, suggesting a decline of around 3.7% year over year.
Our estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,592.8 million, calling for a decline of 5.8% year over year. The same for the Industrial Intermediates & Infrastructure segment stands at $3,065.8 million, indicating a roughly 3.5% year-over-year decline.
Our estimate for revenues for the Performance Materials & Coatings segment is pinned at $2,240.9 million, suggesting a rise of around 2% year over year.
Some Factors at Play
Dow is expected to have faced headwinds from demand softness in Europe and Asia Pacific in the quarter to be reported. Lower consumer spending amid inflationary pressures is impacting demand in Europe. Global industrial activities have been affected by the weaker demand recovery in China. The property sector remains sluggish in China with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure including residential construction remains weak. Soft conditions across these markets are likely to have impacted volumes in the second quarter.
The company is also likely to have faced headwinds from plant turnaround costs in the second quarter. It expects a roughly $25 million headwind from higher planned turnarounds in the quarter in Europe and the U.S. Gulf Coast to impact the Industrial Intermediates & Infrastructure unit. Also, a roughly $75 million headwind is expected in the Packaging & Specialty Plastics unit due to higher planned maintenance activities including a cracker turnaround in Sabine, TX. Costs related to turnarounds are expected to have weighed on Dow’s margins in the June quarter.
Nevertheless, Dow is expected to have benefited from cost-saving and productivity actions in the second quarter. It remains focused on maintaining cost and operational discipline. DOW is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Its targeted actions delivered $1 billion in cost savings for full-year 2023. Benefits of DOW’s restructuring programs are likely to be reflected on its bottom line in the June quarter.
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 -2.50%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at 72 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 #4 (Sell).
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:
The consensus estimate for AEM’s earnings for the second quarter is currently pegged at 86 cents.
ATI Inc. (ATI - Free Report) , slated to release earnings on Aug 6, has an Earnings ESP of +3.50% and carries a Zacks Rank #3 at present.
The consensus mark for ATI’s second-quarter earnings is currently pegged at 58 cents.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release second-quarter earnings on Jul 31, has an Earnings ESP of +14.66%.
The Zacks Consensus Estimate for Kinross Gold's earnings for the second quarter is currently pegged at 13 cents. KGC currently carries a Zacks Rank #2.
Image: Bigstock
Dow (DOW) Gears Up for Q2 Earnings: What's in the Cards?
Dow Inc. (DOW - Free Report) is scheduled to come up with second-quarter 2024 results before the opening bell on Jul 25.
The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters at an average of around 11.4%. It posted an earnings surprise of roughly 19.2% in the last reported quarter.
While DOW is expected to have benefited from its cost and productivity initiatives, soft demand due to weak global economic activities and plant turnaround costs are likely to have affected its second-quarter performance.
Dow’s shares are up 3.6% over a year compared with a 9.4% decline recorded by the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What do the Estimates Say?
The Zacks Consensus Estimate for revenues for Dow for the second quarter is currently pegged at $11,000.6 million, suggesting a decline of around 3.7% year over year.
Our estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $5,592.8 million, calling for a decline of 5.8% year over year. The same for the Industrial Intermediates & Infrastructure segment stands at $3,065.8 million, indicating a roughly 3.5% year-over-year decline.
Our estimate for revenues for the Performance Materials & Coatings segment is pinned at $2,240.9 million, suggesting a rise of around 2% year over year.
Some Factors at Play
Dow is expected to have faced headwinds from demand softness in Europe and Asia Pacific in the quarter to be reported. Lower consumer spending amid inflationary pressures is impacting demand in Europe. Global industrial activities have been affected by the weaker demand recovery in China. The property sector remains sluggish in China with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure including residential construction remains weak. Soft conditions across these markets are likely to have impacted volumes in the second quarter.
The company is also likely to have faced headwinds from plant turnaround costs in the second quarter. It expects a roughly $25 million headwind from higher planned turnarounds in the quarter in Europe and the U.S. Gulf Coast to impact the Industrial Intermediates & Infrastructure unit. Also, a roughly $75 million headwind is expected in the Packaging & Specialty Plastics unit due to higher planned maintenance activities including a cracker turnaround in Sabine, TX. Costs related to turnarounds are expected to have weighed on Dow’s margins in the June quarter.
Nevertheless, Dow is expected to have benefited from cost-saving and productivity actions in the second quarter. It remains focused on maintaining cost and operational discipline. DOW is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Its targeted actions delivered $1 billion in cost savings for full-year 2023. Benefits of DOW’s restructuring programs are likely to be reflected on its bottom line in the June 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 -2.50%. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at 72 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 #4 (Sell).
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 - Free Report) , scheduled to release earnings on Jul 31, has an Earnings ESP of +4.93% and carries a Zacks Rank #2. 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 86 cents.
ATI Inc. (ATI - Free Report) , slated to release earnings on Aug 6, has an Earnings ESP of +3.50% and carries a Zacks Rank #3 at present.
The consensus mark for ATI’s second-quarter earnings is currently pegged at 58 cents.
Kinross Gold Corporation (KGC - Free Report) , scheduled to release second-quarter earnings on Jul 31, has an Earnings ESP of +14.66%.
The Zacks Consensus Estimate for Kinross Gold's earnings for the second quarter is currently pegged at 13 cents. KGC currently carries a Zacks Rank #2.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.