Dow Inc. DOW is slated to come up with second-quarter 2026 results before the opening bell on July 23. While DOW is expected to have benefited from its cost and productivity initiatives, soft demand due to weak global economic activities and input cost headwinds are likely to have weighed on its second-quarter performance.
The Zacks Consensus Estimate for second-quarter earnings has been revised 23.7% upward in the past 60 days. The consensus estimate for earnings is pegged at $1.20 per share, suggesting a 385.7% year-over-year increase.
DOW surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. It has a trailing four-quarter negative earnings surprise of roughly 38.2%, on average.
Q2 Earnings Whispers for DOW Stock
Our proven model does not conclusively predict an earnings beat for DOW this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Dow has an Earnings ESP of -3.37% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping DOW’s Q2 Results
Dow is expected to have benefited from cost-saving and productivity actions in the second quarter. Dow is taking action to cut costs by $1 billion to drive margins. It expects to achieve the majority of the cost savings through reductions in direct and labor costs. Dow realized more than $400 million of benefits from these actions in 2025, with the remaining benefits expected by 2026.
DOW has launched the “Transform to Outperform” initiative to improve productivity, reduce complexity, streamline its end-to-end processes and enable improved returns. The plan targets at least $2 billion near-term operating EBITDA improvement, with two-thirds of the benefits expected to be realized from productivity improvements. The company expects EBITDA benefits of roughly $500 million from this program in 2026. It expects to deliver roughly $1.1 billion in benefits from self-help actions this year.
Dow is expected to have faced headwinds from demand softness in the quarter to be reported. Lower consumer spending amid inflationary pressures is affecting demand in Europe. Construction and manufacturing activities remain soft in the region. Demand in Asia has been affected by a weaker demand recovery in China. The property sector in China remains sluggish, with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure, including residential construction, remains weak. Dow is also seeing softness in automotive in Europe due to weak demand. Higher costs are also expected to impact the U.S. automotive market in 2026. Weak conditions across these markets are likely to have impacted volumes in the second quarter.
DOW also faces challenges from higher feedstock costs in Asia and Europe. The Middle East conflict and the blockade of the Strait of Hormuz have led to significant supply disruptions and feedstock cost pressure in these regions. Elevated feedstock and energy costs are expected to have weighed on margins in the second quarter.
Dow Stock’s Price Performance and Valuation
DOW’s shares have gained 2.4% over the past year, outperforming the Zacks Chemicals Diversified industry’s 6.3% decline while underperforming the S&P 500’s increase of 21.2%. Its peers, LyondellBasell Industries N.V. LYB and Eastman Chemical Company EMN have lost 7.2% and 13.9%, respectively, while BASF SE BASFY has gained 6.7% over the same period.
DOW’s One-year Price Performance
From a valuation standpoint, DOW is currently trading at a forward price-to-sales ratio of 0.49, below the industry’s 0.88. DOW is trading at a discount to LyondellBasell, Eastman Chemical and BASF. Dow has a Value Score of B, while LyondellBasell, Eastman Chemical and BASF have a Value Score of A, each.
DOW’s P/S F12M Vs. Industry, LYB, EMN and BASFY
Investment Thesis for DOW Stock
DOW benefits from its differentiated portfolio and advantaged feedstock positions in the Americas. It remains focused on investing in attractive areas and executing high-return incremental growth projects in cost-advantaged regions. Dow is also committed to maintaining cost and operational discipline. Moreover, it has a strong balance sheet and generates substantial cash flows, which allow it to fund its growth investments and drive shareholder value.
The challenges facing DOW include soft demand conditions triggered by elevated inflation, low consumer confidence, and geopolitical tensions, particularly in the building and construction, and durable goods markets. It also faces margin pressure from higher feedstock costs in Asia and Europe.
How Should Investors Play the DOW Stock?
Dow benefits from its differentiated portfolio and feedstock advantages in the Americas and maintains a strong focus on cost control and operational efficiency. However, DOW is exposed to weak demand in a challenging environment as well as cost headwinds in Europe and Asia, which may weigh on its near-term performance. Holding onto the DOW stock will be prudent for investors who already own it, awaiting more clarity on the company’s prospects following its forthcoming earnings release.
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Dow Inc. (DOW): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).