Dow Chemical Fourth Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Dow Chemical (NYSE:DOW) will unveil its latest earnings tomorrow, Thursday, January 31, 2013. Dow Chemical produces chemicals, plastic materials, agricultural, advanced materials, and other products and services, including insurance.

Dow Chemical Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 34 cents per share, a rise of 36% from the company’s actual earnings for the same quarter a year ago. The average estimate is the same as three months ago. Between one and three months ago, the average estimate moved down. It has risen from 33 cents during the last month. For the year, analysts are projecting net income of $1.90 per share, a decline of 24.9% from last year.

Last quarter, the company came in at profit of 42 cents per share against a mean estimate of net income of 37 cents per share, beating estimates after missing them in the previous quarter. In the second quarter, it missed forecasts by 9 cents.

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A Look Back: In the third quarter, profit fell 35.3% to $582 million (42 cents a share) from $900 million (69 cents a share) the year earlier, but exceeded analyst expectations. Revenue fell 9.7% to $13.64 billion from $15.11 billion.

Here’s how Dow Chemical traded following its last earnings report 3 months ago and leading up to its upcoming earnings report this week:

dow

Wall St. Revenue Expectations: On average, analysts predict $13.7 billion in revenue this quarter, a decline of 2.8% from the year-ago quarter. Analysts are forecasting total revenue of $56.56 billion for the year, a decline of 5.7% from last year’s revenue of $59.98 billion.

Analyst Ratings: There are mostly holds on the stock with 13 of 19 analysts surveyed giving that rating.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of three-straight quarters of revenue declines. Revenue fell 0.1% in the first quarter and 9.6% in second quarter before falling again in the third quarter.

The company is trying to stem some negative momentum heading into this earnings announcement. Profit has dropped by a year-over-year average of 46% over the past four quarters.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.83 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.84 in the second quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 1.3% to $12.79 billion while assets rose 1.2% to $23.46 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)