DOW - Dow: Continues To Successfully Adapt To Unfavorable Market Conditions
2024-06-08 01:33:37 ET
Summary
- Dow Inc. (DOW) remains a highly cyclical business that is vulnerable to interest rates, global demand, and pricing margins.
- All segments have struggled to show any meaningful growth, but this is due to external factors rather than any fundamental issues internally.
- Future interest rate cuts may be on the horizon and can serve as a catalyst for growth as margins improve and sales volume increases.
- Even with conservative growth estimates of 2.5%, DOW remains undervalued and has the potential for a double-digit price growth as conditions improve.
- Liquidity remains strong, but the dividend coverage needs to be improved to instill investor confidence.
Overview
I've previously covered Dow Inc ( DOW ) and discussed some thoughts around the great capital management that's helped sustain the company's financial health back in January. However, I thought that it would be a good time to revisit DOW now that Q1 earnings were reported. In addition, I wanted to provide an update valuation estimate using the updated financials and outlook. Additionally, DOW is still listed on the 2024 Dogs Of The Dow list due to its continued underperformance and higher dividend yield. However, I believe that the elevated dividend yield and suppressed price is a result of external factors rather than anything fundamentally wrong with the business....
Dow: Continues To Successfully Adapt To Unfavorable Market Conditions