Dow (DOW) reports Q2 earnings July 24. Consensus calls for EPS of $0.72, up from $0.56 a year ago, on $10.5B revenue. Morgan Stanley downgraded the stock in May on demand concerns.
Dow Inc. (DOW) is set to report second-quarter earnings later this month, with sell-side analysts projecting a year-over-year improvement in both revenue and earnings per share. The consensus estimate calls for adjusted EPS of $0.72, up from $0.56 in the same quarter a year ago, on revenue of roughly $10.5 billion, according to data compiled by Visible Alpha.
The optimism comes despite a downgrade from one analyst firm last month. Morgan Stanley cut its rating on DOW to Equal-weight from Overweight in late May, citing concerns over near-term demand in construction and packaging end markets. The stock has since slipped about 4% from that downgrade date, trading near $52.50.
Earnings estimates have drifted lower over the past 90 days. The consensus EPS figure has declined by roughly 6% since early April, reflecting weaker margin expectations in the Performance Materials & Coatings segment. Analysts on the sell side expect the segment's operating EBIT to fall sequentially on lower polyethylene spreads.
Still, the broader narrative around Dow is tied to a recovery in industrial demand, particularly in North American packaging and European automotive builds. The company's integrated downstream model typically captures margin when feedstock costs – namely ethane and propane – stay low relative to derivative prices. Those conditions held through Q2, with U.S. natural gas liquids prices remaining below year-ago levels.
AlphaScala's proprietary scoring system gives DOW a Mixed rating with an Alpha Score of 46 out of 100, placing it in the Materials sector's middle tier. The score reflects a below-average earnings-quality trajectory balanced against a valuation that screens cheap on an EV/EBITDA basis relative to chemical peers.
Investors will watch the company's commentary on inventory destocking trends – a headwind through the first half of the year – and any update on the timing of a potential recovery in durable goods demand. Dow reports before the open on July 24.
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