The Dow Chemical Co. (NYSE: DOW) – Q1 FY 2011 Earnings Preview
Wednesday, April 27, 2011 2:23 PM

The Dow Chemical Co. (NYSE: DOW), one of the world's largest chemical manufacturing and supplying company, is expected to report its first quarter FY 2011 earnings on April 28, 2011. In the last four quarters, the company's reported EPS exceeded analysts' consensus estimates for quarters ended March 2010, September 2010 and December 2010, by margins of $43.30 percent, 31.70 percent and 34.30 percent. For the quarter ended June 2010, the reported EPS missed analysts' consensus estimate by a margin of 3.60 percent.

Dow is a diversified, worldwide manufacturer and supplier of products used primarily as raw materials in the manufacture of customer products and services The Company's more than 5,000 products are manufactured at 188 sites in 35 countries across the globe.

In the quarter ended December 2010, Dow Chemical reported revenue of $13.8 billion, representing a 22 percent increase compared with revenue of $12.46 billion reported in the fourth quarter FY 2009. Top-line growth was driven by a 12 percent increase in volume and a 10 percent increase in price. Net income from continuing operations excluding certain items was $625 million, more than double the $286 million result in the fourth quarter of 2009. Reported earnings for the quarter were $0.37 per share, compared with $0.08 per share in the same period last year.

During fiscal 2010, Dow reported full-year 2010 earnings of $1.72 per share, or $1.97 per share, excluding certain items. This compared with prior-year earnings of $0.32 per share, or $0.63 per share excluding certain items and discontinued operations. Revenue for the full year was $53.7 billion, up 26 percent versus the prior year.

During the first quarter FY 2011, the company's board of directors declared a 67 percent increase in the second quarter dividend, from $0.15 per share to $0.25 per share. The dividend will be payable on July 29, 2011 to shareholders of record on June 30, 2011. This will mark the 399th consecutive cash dividend issued by the Company. Dow has paid its shareholders cash dividends every quarter since 1912. The company does not currently have an authorized share repurchase program.

In the chemical industry, Dow competes with El DuPont de Numours & Co. (NYSE: DD). In the trailing twelve months period, DuPont reported EPS of $3.28 percent on revenues of $32.35, with quarterly revenue growth of 16.30 percent. On the other hand, Dow reported EPS of $1.72 per share on revenues of $53.67 billion, with quarterly revenue growth of 10.50 percent.

The Dow Chemical company has a total market capitalization of $44.65 billion. The P/B and P/S ratio of the company is 2.47 and 0.83, respectively, compared with the industry's P/B and P/S ratio of 10.14 and 0.70. The net profit margin of the company is 3.71 percent, lower than the industry's average margin of 10.14 percent. The ROE of the company is 10.61 percent, compared with the industry's ROE of 14.10 percent.

For the first quarter, analysts' EPS estimates range from a low of $0.55 to a high of $0.76 per share, compared with a consensus estimate of $0.66 per share or $0.43 per share in the year ago quarter. For this quarter, analysts' revenue estimates range from a low of $13.26 billion to a high of $14.64 billion, compared with a consensus estimate of $14 billion or $13.42 billion in the same quarter a year ago. For the quarter ended March, 2011, the consensus EPS forecast has been increased from $0.65 per share estimated 7 days ago to the current estimate of $0.66 per share. In the last 52 weeks, Dow Chemical shares have been trading in the range of $22.42 and $39. The last trading price of the stock was $39.48 on April 21, 2011.



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