The Dow Chemical Company
) is scheduled to report its fourth quarter and full-year 2011
results before the market opens on Thursday, February 2.
The Zacks Consensus Estimate for the quarter is 32 cents per
share, representing a year-over-year decrease of 32.24%.
With respect to earnings surprises, the company has beaten the
Zacks Consensus Estimate in three of the trailing four quarters.
This is reflected in the average earnings surprise of 14.95%, with
positive surprises in three quarters and a negative surprise in the
third quarter of 2011.
The Dow Chemical Company earned 69 cents per share in the third
quarter of 2011, ahead of the Zacks Consensus Estimate of 64 cents
per share as well as last year's 45 cents per share. However,
including one-time charges, the company earned 62 cents per share
compared with 54 cents per share in the year-ago quarter.
Quarterly revenues jumped 17% year over year to $15.1 billion,
surpassing the Zacks Consensus Estimate of $14.7 billion. The
improvement was driven by double-digit gains in all operating
segments and geographic areas, with the largest growth in Latin
America (21%) and Europe, Middle East and Africa (EMEA) (19%). In
the emerging geographies, sales reached $5 billion, a new quarterly
record for the company.
There was no financial guidance from Dow. However, Dow
anticipates demand to improve further, especially in Asia with the
global economic recovery. The US and European markets have also
started showing signs of improvement.
Dow is also optimistic on major consumer-markets, including
electronics, coatings, automotive and packaging. However,
construction markets are expected to remain weak.
Agreement of Estimate Revisions
In the past 30 days, two analysts made downward revisions for
the fourth quarter and fiscal 2011. None of the analysts made
upward revision in the last 30 days for the fourth quarter of 2011
and fiscal 2011. The analysts have lowered their estimates due to
the increase in the prices of ethane due to strong demand and
In the last seven days, none of the analysts made any revisions
to their estimates.
Magnitude of Estimate
In the last 30 days, the Zacks Consensus Estimate has decreased
to 32 cents from 33 cents in fourth quarter and has improved
marginally to $2.64 from $2.63 per share for fiscal 2011.
Over the last 90-day period, the Zacks Consensus Estimate
plunged from 42 cents to 32 cents per share for the fourth quarter
of 2011 and from $2.73 cents to $2.64 per share for fiscal
We expect the electronics and construction end markets to remain
weak in the fourth quarter. Moreover, we believe that there will be
a margin compression in Asia and Western Europe in the near term
due to high costs and weak demand.
DOW also faces stiff competition from
EI DuPont de Nemours & Co.
However, Dow's performance in the emerging markets remains
strong and we expect this to continue in the upcoming quarter.
Dow's innovative line of products in its pipeline also adds to its
strength. Further, the company continues to focus on cost reduction
In view of the above stated reasons, the company retains a Zacks
#2 Rank on its shares, indicating a short-term (1 to 3 months) Buy
rating and we have a long-term (more than 6 months) Neutral
recommendation on the stock.
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