Dow Inc. Underperforms Market Amid Negative Earnings Projections

Dow Inc. Shares Decline Amid Negative Earnings Projections

Dow Inc. (DOW) experienced a notable decline in its stock price, closing down 3.47% at $24.17 in the latest trading session. This performance contrasted with broader market movements, as the S&P 500 advanced 0.47%, the Dow Jones Industrial Average gained 0.11%, and the technology-focused Nasdaq Composite rose 0.94%.

Detailed Performance and Projections

The materials science company is facing significant negative analyst sentiment ahead of its forthcoming earnings report, scheduled for October 23, 2025. Projections indicate an Earnings Per Share (EPS) of -$0.28 for the next quarter, signaling a substantial 159.57% year-over-year decrease. Quarterly revenue is concurrently forecasted to decline by 6.46% to $10.18 billion. For the full year, analysts anticipate an EPS of -$0.84 and revenue of $40.94 billion, representing year-over-year changes of -149.12% and -4.72%, respectively. The Zacks Consensus EPS estimate has seen a 0.75% downward revision over the past month, contributing to Dow Inc. currently holding a Zacks Rank of #5, denoting a "Strong Sell."

Analyst Sentiment and Industry Headwinds

The pronounced decline in Dow Inc.'s stock price can be largely attributed to these significantly negative earnings projections and the explicit "Strong Sell" rating from analysts. The market's reaction reflects concerns over the company's profitability and future growth prospects. Furthermore, the Chemical - Diversified industry, in which Dow Inc. operates, currently ranks in the bottom 7% of all industries, indicating sector-wide challenges that exacerbate individual company concerns. Historical data reveal that Dow Inc.'s performance following earnings misses since 2022 has shown short-term positive excess returns (+0.9% on average for 1-day) but has consistently turned negative by day 5 (-1.7%) and day 30 (-1.3%), suggesting sustained underperformance in the face of compounding risks.

Broader Context and Financial Indicators

Despite the recent daily downturn, Dow Inc. shares had appreciated 7.19% over the past month, outperforming the Basic Materials sector's gain of 4.93% and the S&P 500's gain of 2.32% during the same period. However, this short-term gain is overshadowed by a 54.3% decline over the past year and a 39% loss since the beginning of the year. The company's Q2 2025 saw a non-GAAP loss per share of $0.42 and a 7.3% year-over-year decline in net sales, which led to a 50% dividend cut and a 17.45% stock drop on July 24, 2025. Fitch Ratings also downgraded Dow Inc.'s Long-Term Issuer Default Rating (IDR) from 'BBB+' to 'BBB', citing elevated leverage and expected negative free cash flow exceeding $2.6 billion for the year. The company's forward Price-to-Earnings (P/E) ratio has surged to 108.9x, significantly higher than the industry average of 16.31x, suggesting the stock may be overvalued.

Outlook and Key Factors

Analyst sentiment towards Dow Inc. remains largely cautious, with a consensus "Hold" rating among 19 surveyed analysts. Price targets vary widely, with an average target of $30.74, suggesting a potential upside of approximately 17% from its recent closing price. However, this is tempered by the prevailing "Strong Sell" rating from Zacks. One analyst, Frank J. Mitsch at Fermium Research, upgraded Dow Inc. to a "Buy" rating with a $35 price target after Q1 2025, citing project delays, asset sales, and anticipated lawsuit payouts as factors that could help maintain the dividend through 2026. Conversely, institutions like Goldman Sachs have shown rising bearish sentiment, contributing to 5.03% short interest in the stock.

Investors will closely monitor Dow Inc.'s earnings release on October 23, 2025, for confirmation of the projected declines and any management commentary on future strategies. The company's ability to navigate ongoing legal scrutiny, including a class-action lawsuit alleging misrepresentation of financial resilience, and the broader downturn in the global chemical industry will be critical. Management has initiated cost-cutting measures and asset reviews, aiming to generate approximately $6 billion in cash. The sustained leverage above 3.0x EBITDA or continued negative free cash flow could trigger further credit rating downgrades. The resolution of legal disputes, effectiveness of restructuring efforts, and shifts in global demand within the construction and automotive sectors will be key determinants of Dow Inc.'s long-term recovery.

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[1] Dow Inc. (DOW) Stock Sinks As Market Gains: What You Should Know[2] Dow Inc. (DOW) Stock Sinks As Market Gains: What You Should Know | Nasdaq[3] Dow Inc. (DOW) Stock Sinks As Market Gains: What You Should Know - September 15, 2025 - Zacks.com - Markets Insider

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