MIDLAND, Mich. - Dow Inc. (NYSE: NYSE:DOW), a leading materials science company, has revised its third-quarter financial outlook, expecting revenue of about $10.6 billion and Operating EBITDA of approximately $1.3 billion. The update follows an unplanned incident at a Texas ethylene cracker in late July and current economic pressures in Europe, which have led to higher input costs and margin compression.
Despite these challenges, Dow's CEO Jim Fitterling noted on Thursday that improved pricing and feedstock costs in North America's Packaging (NYSE:PKG) & Specialty Plastics sector have partially offset the negative impacts. Looking ahead to the fourth quarter, the company anticipates benefits from lower turnaround costs, increased operating rates following the restoration of the Texas facility, and fewer weather-related disruptions in the U.S. Gulf Coast.
Fitterling also highlighted Dow's continued commitment to operational and financial discipline and progress on long-term growth initiatives. He will further discuss the company's performance and outlook during a fireside chat at the 12th Annual Morgan Stanley Laguna Conference, with a live webcast available for interested parties.
Dow, with manufacturing sites in 31 countries and a workforce of about 35,900, reported sales of approximately $45 billion in 2023. The company remains focused on innovation, customer-centricity, inclusivity, and sustainability to drive profitable growth and contribute to a sustainable future.
This financial update is based on a press release statement from Dow Inc. and includes forward-looking statements subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those projected. Investors and stakeholders are cautioned to consider these factors and refer to Dow's filings with the SEC for a detailed discussion of risks and uncertainties.
In other recent news, Dow, a leading materials science company, has announced a quarterly dividend of 70 cents per share, marking its 452nd consecutive dividend issued. This announcement continues Dow's tradition of rewarding shareholders. In terms of earnings, Dow reported a 4% year-over-year decrease in net sales, totaling $10.9 billion, but also saw a 1% sequential increase in sales and volume. Operating EBIT rose to $819 million, reflecting a $145 million gain from the previous quarter.
In analyst news, BMO Capital Markets, Piper Sandler, and RBC Capital have all adjusted their price targets for Dow. BMO Capital has reduced its target to $57.00, maintaining a Market Perform rating. Piper Sandler cut its price target to $64, keeping an Overweight rating, and RBC Capital reduced its target from $62 to $57, maintaining a Sector Perform rating.
These recent developments reflect the company's performance amid a complex macroeconomic landscape. Dow's strategic focus on cash flow generation yielded $832 million from operations and enabled a substantial $691 million return to shareholders. Despite facing some challenges, Dow maintains a cautiously optimistic outlook, expecting a slight increase in third-quarter earnings and significant EBITDA growth as it approaches mid-cycle earnings levels.
InvestingPro Insights
As Dow Inc. (NYSE: DOW) navigates the aftermath of the unplanned incident and the current economic pressures, a glance at the company's financial health through InvestingPro's real-time data reveals several key points. The company's market capitalization stands at $35.56 billion, reflecting its significant presence in the materials science sector. The P/E ratio, a measure of the company's current share price relative to its per-share earnings, is at 31.41, which suggests a higher valuation compared to historical averages. However, the adjusted P/E ratio for the last twelve months as of Q2 2024 is 20.98, indicating a potential normalization in valuation.
Dow's revenue for the last twelve months as of Q2 2024 amounted to $43.03 billion, although it has experienced a decline of 12.62% over the same period. This contraction aligns with the challenges mentioned by CEO Jim Fitterling, including the Texas incident and European economic pressures. Despite this, InvestingPro Tips highlight that Dow is expected to grow its net income this year and pays a significant dividend to shareholders, with a yield of 5.52% as of the last recorded date. This dividend yield is particularly notable for income-seeking investors, especially as the company trades near its 52-week low.
For those interested in a deeper dive into the company's prospects, there are additional InvestingPro Tips available. These tips include insights such as the management's aggressive share buybacks, low price volatility of the stock, and the company's status as a prominent player in the Chemicals industry. In total, there are 11 additional InvestingPro Tips listed, which can provide a more comprehensive understanding of Dow's strategic positioning and financial outlook.
Investors may also take note that Dow's next earnings date is scheduled for October 24, 2024, which will be an opportunity to assess the company's progress in overcoming its recent challenges and to gauge its trajectory heading into the end of the year.
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