Attractive Price-to-Sales Ratio
Reasonable EV to EBITDA
Strong Operating Profit Margin
Robust Gross Profit Margin
Good Current Ratio
Strong Interest Coverage
📈 Steady Volume Growth
💰 Strong Cash Flow Management
🌍 Strategic Asset Optimization
🚀 Growth Investments
🔍 Focus on Innovation
High Price-to-Earnings Ratio
Negative Price to Free Cash Flow Ratio
Low Net Profit Margin
Return on Equity Needs Improvement
High Debt-to-Equity Ratio
Negative Free Cash Flow Per Share
📉 Pricing Pressure
⚠️ Challenges in European Markets
📉 Economic Uncertainty
💔 Weak Consumer Demand
Overall, Dow demonstrates resilience and adaptability in its business model with steady volume growth and effective cash management. However, it faces challenges from pricing pressures and uncertain economic conditions, particularly in Europe. The company's future prospects are bolstered by strategic investments in sustainability and innovation, but economic uncertainties could pose risks to growth.
Analysis Date: January 30, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$65.70
Current Market Price: $28.20
IV/P Ratio: 2.33x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
56.99999999999999%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for DOW
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (16.53)
P/B ratio ≤ 1.5 (1.11)
Current ratio ≥ 2.0 (1.61x)
Long-term debt < Net current assets (2.65x)
Margin of safety (56.99999999999999%)
DOW does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
With an operating profit margin of 27.20%, DOW effectively converts a significant portion of its revenue into operating income, showcasing operational efficiency.
A gross profit margin of 33.08% indicates that DOW has a solid ability to cover costs related to production and maintain profitability at the gross level.
The net profit margin of 2.58% is quite low, suggesting that after all expenses, DOW retains a minimal portion of revenue as profit, which could limit growth.
A return on equity of 6.11% is low, indicating that DOW's ability to generate profits from shareholders' equity is not very strong.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
6.12%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
-0.09%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
10.72%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
2.60%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
DOW's current ratio of 1.6126 indicates that the company has more current assets than current liabilities, which is a positive sign of liquidity.
An interest coverage ratio of 14.83 suggests that DOW can easily meet its interest obligations from earnings, indicating good financial health.
The debt-to-equity ratio of 0.9885 suggests that DOW has a relatively high level of debt compared to equity, which could pose risks if not managed properly.
With free cash flow per share at -0.2146, DOW is not generating positive cash flow on a per-share basis, which can limit potential for dividends and reinvestment.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.96x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.61x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Dow delivered its fifth consecutive quarter of year-over-year volume growth despite weak macroeconomic conditions, indicating resilience and operational effectiveness.
The company generated $811 million in cash flow from continuing operations and maintained a disciplined approach to cash conversion, achieving a cash conversion rate of approximately 67%.
Dow is actively optimizing its global portfolio for growth and has taken steps to manage costs, including the sale of non-core assets and strategic reviews of underperforming segments.
Local prices decreased by 3% year-over-year due to industry-wide pricing pressures, impacting overall revenue.
Dow faces structural challenges in European markets, particularly in polyurethanes, which have been underperforming for years and are contributing to a strategic review of assets in that region.
The ongoing construction of the Path2Zero investment in Alberta is expected to generate approximately $1 billion in incremental EBITDA annually by 2030, highlighting Dow's commitment to sustainable growth.
Dow has a strong commitment to innovation and has been recognized with numerous awards, reinforcing its branding as a forward-thinking organization.
Global manufacturing PMI is at contractionary levels, indicating a slowdown that could impact demand across Dow's markets, particularly in construction and durable goods.
Consumer spending is constrained by persistent inflation, affecting demand in critical sectors such as housing and automotive.