Dow Chemical Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Dow Chemical (NYSE:DOW) will unveil its latest earnings on Thursday, October 25, 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 37 cents per share, a decline of 40.3% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 65 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 39 cents during the last month. Analysts are projecting profit to rise by 22.9% compared to last year’s $1.95.

Past Earnings Performance: Last quarter, the company fell short of estimates by 2 cents, coming in at net income of 55 cents per share against a mean estimate of profit of 64 cents. The company topped expectations in the first quarter.

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A Look Back: In the second quarter, profit fell 31.2% to $734 million (55 cents a share) from $1.07 billion (84 cents a share) the year earlier, missing analyst expectations. Revenue fell 9.6% to $14.51 billion from $16.05 billion.

Wall St. Revenue Expectations: Analysts predict a decline of 5.9% in revenue from the year-earlier quarter to $14.22 billion.

Stock Price Performance: Between October 15, 2012 and October 19, 2012, the stock price rose $1.54 (5.4%), from $28.32 to $29.86. 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.

Key Stats:

After experiencing income drops the past three quarters, the company is hoping to use this earnings announcement to rebound. Net income fell 87.3% in the fourth quarter of the last fiscal year, by 30% in the first quarter and again in the second quarter.

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

Analyst Ratings: There are mostly holds on the stock with 13 of 18 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.84 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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