The Dow Chemical Company (DOW) came in ahead of expectations last quarter, leading to even more upward estimate revisions. The higher outlook has lifted the stock to a Zacks #1 Rank (Strong Buy) and maintained a great value as well.
Company Description
Dow Chemical offers more than 5,000 different products from hundreds of facilities in almost 40 countries. They are best known for specialty chemicals, advanced materials and plastics, amongst many other areas of business.
Well Ahead of Expectations
On Apr 28 Dow Chemical reported a 34% increase in its first-quarter net income. After adjustments the bottom line worked out to $0.82 per share, which was 15 cents better than the Zacks Consensus Estimate. The company has beat the street’s expectations in each of the past 3 quarters.
Revenue rose 10% to $14.7 billion, about $800 million more than analysts were looking for. They did get some help from higher pricing, but the majority of the increase came on higher volumes.
Analysts are Happy
After the news came out, analysts quickly began raising estimates. The 2011 Zacks Consensus Estimate is up 30 cents, to $2.87 on 16 upward revisions. None of the analysts have pared their expectations.
With 15 upward revisions and no downward moves, the 2012 average estimate rose 10 cents, to $3.46. In 2010 Dow made $1.97 per share, so expected growth rates are now 46% and 21%, respectively.
Thanks to the higher estimates, shares of DOW are trading at just under 14 times the 2011 consensus.
Long-Term Trend
Below you can see the drastic improvements to Dow’s earnings over the past few years. While the estimates have fluctuated for each year, the year-over-year growth has been fantastic. Right now all signs point to the trend continuing.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
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