Is Dow Chemical Likely to Outperform?

With shares of The Dow Chemical Company (NYSE:DOW) trading at around $32.30, is DOW an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Dow Chemical is getting slammed after reporting Q4 results. The stock closed down 6.96 percent today. Q4 EPS came in at -$0.61, which missed expectations and is a big drop from -$0.02 for the same quarter last year. Dow Chemical took charges of $990 million for the quarter. Without restructuring and impairment charges, EPS is $0.33. Q4 revenue came in at $13.92, which beat expectations. Gross margin was 14.2 percent, which was an improvement of 160 basis points year-over-year. Operating margin was 4.7 percent, which was an improvement of 110 basis points year-over-year. Net margin was -4.5 percent, which was a 500 basis point decline year-over-year.

FY2012 EPS came in at $0.70, which is a 65 percent drop compared to last year. Excluding one-time items, EPS is $1.90, but that would still be short of 2011 EPS, which was $2.05. FY2012 revenue came in at $56.80 billion, which is also weaker than 2011. Q1 estimates are $0.65 EPS and $14.79 billion in revenue. FY2013 estimates are $2.42 EPS and $58.99 billion in revenue.

Investors are making great returns as markets roar higher. Join the party. Click here to discover our Feature Stock Pick now!

Dow Chemical is in the midst of a cost-cutting program worth $2.5 billion. At least 2,400 jobs will be cut, and at least 20 plants will be shut.

Let’s take a look at some more important numbers prior to forming an opinion on the stock…

More Articles About:   , , ,