DOW Gears Up for Q4 Earnings: What's in the Cards for the Stock?

Dow Inc. DOW is scheduled to come up with fourth-quarter 2025 results before the opening bell on Jan. 29.

DOW surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed twice. It has a trailing four-quarter negative earnings surprise of 35.8% on average. Dow posted an earnings surprise of 38.7% in the last reported quarter.

Soft demand due to weak global economic activities and pricing pressures are likely to have affected DOW’s fourth-quarter performance. The company, however, is expected to have benefited from its cost and productivity initiatives.

Dow’s shares are down 32.8% over the past year compared with the Zacks Chemicals Diversified industry’s 21% decline.

Let’s see how things are shaping up for this announcement.

What do DOW’s Revenue Estimates Say?

The Zacks Consensus Estimate for fourth-quarter consolidated revenues for DOW is currently pegged at $9,487.1 million, reflecting a year-over-year decline of 8.8%.

The consensus estimate for revenues for the Packaging & Specialty Plastics segment is currently pegged at $4,834 million, calling for a decline of 13% year over year. The same for the Industrial Intermediates & Infrastructure segment stands at $2,653 million, indicating an 8.6% year-over-year decline.

The consensus estimate for revenues for the Performance Materials & Coatings segment is pinned at $1,836 million, suggesting a fall of 5.5% year over year.

Factors at Play for DOW Stock

Demand softness is expected to have impacted DOW’s performance 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, also remains weak. Dow is also seeing softness in automotive in Europe due to weak demand. Weak conditions across these markets are likely to have weighed on DOW’s volumes in the fourth quarter. Weak macroeconomic conditions due to disruptions caused by tariffs are expected to have affected business and consumer sentiment. 

Dow is also being challenged by weak siloxane prices in its Performance Materials & Coatings unit. The segment continues to see siloxane pricing pressure, partly due to supply additions in Asia. Siloxane prices remain under pressure due to competitive pricing pressure resulting from additional supply driven by capacity additions in China. While capacity additions have slowed, elevated industry supply is expected to continue to have impacted prices in the fourth quarter. The company also faces headwinds from higher feedstock and energy costs, which are expected to have weighed on the margins in the Packaging & Specialty Plastics segment.

Nevertheless, Dow is likely to have benefited from cost-saving and productivity actions. DOW is implementing targeted actions focused on reducing direct costs and labor costs. It is taking action to cut costs by $1 billion to drive margins. Dow sees around $400 million in benefits from these actions for full-year 2025, with full benefits expected by 2026. The benefits of its cost-saving actions are likely to be reflected in its bottom line in the to-be-reported quarter. 

Dow Inc. Price and EPS Surprise

Dow Inc. price-eps-surprise | Dow Inc. Quote

What Our Model Unveils 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.

Earnings ESP: Earnings ESP for DOW is +12.87%. The Zacks Consensus Estimate for the fourth quarter is currently pegged at a loss of 46 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: DOW currently carries a Zacks Rank #4 (Sell).

Basic Materials Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Agnico Eagle Mines Limited AEM, scheduled to release earnings on Feb. 12, has an Earnings ESP of +21.23% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for AEM’s earnings for the fourth quarter is currently pegged at $2.19.

Kinross Gold Corporation KGC, slated to release earnings on Feb. 18, has an Earnings ESP of +3.72%.

The Zacks Consensus Estimate for KGC's earnings for the fourth quarter is currently pegged at 56 cents. KGC currently carries a Zacks Rank #3. 

Newmont Corporation NEM, scheduled to release earnings on Feb. 19, has an Earnings ESP of +12.83% and carries a Zacks Rank #3 at present.

The consensus mark for NEM’s fourth-quarter earnings is currently pegged at $1.81.

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This article originally published on Zacks Investment Research (zacks.com).

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