Dow Chemical’s Quarterly Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Dow Chemical (NYSE:DOW) will unveil its latest earnings tomorrow, Thursday, July 26, 2012. 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 analyst estimate is for profit of 64 cents per share, a decline of 24.7% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 77 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 67 cents during the last month. Analysts are projecting profit to rise by 2% versus last year to $2.48.

Past Earnings Performance: Last quarter, the company topped expectations by 2 cents, coming in at net income of 61 cents per share versus a mean estimate of profit of 59 cents per share. This followed two straight quarters of missing estimates.

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A Look Back: In the first quarter, profit fell 30% to $497 million (35 cents a share) from $710 million (54 cents a share) the year earlier, but exceeded analyst expectations. Revenue was unchanged at $14.72 billion.

Stock Price Performance: Between April 25, 2012 and July 24, 2012, the stock price fell $4.58 (-13.23%), from $34.63 to $30.05. The stock price saw one of its best stretches over the last year between December 28, 2011 and January 6, 2012, when shares rose for seven straight days, increasing 7.6% (+$2.15) over that span. It saw one of its worst periods between April 25, 2012 and May 8, 2012 when shares fell for 10 straight days, dropping 11% (-$3.97) over that span.

Wall St. Revenue Expectations: Analysts predict a decline of 2.2% in revenue from the year-earlier quarter to $15.7 billion.

Key Stats:

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 17.8% in the second quarter of the last fiscal year, 17.4% in the third quarter of the last fiscal year and 2.4%in the fourth quarter of the last fiscal year before dropping in the first quarter.

After experiencing income drops the past two quarters, the company is hoping to use this earnings announcement to rebound. Net income dropped 87.3% in the fourth quarter of the last fiscal year and then again in the first quarter.

Analyst Ratings: With five analysts rating the stock as a buy, three rating it as a sell and eight rating it as a hold, there are indications of a bullish outlook.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.78 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.

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

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