NEW YORK - Dow (NYSE: DOW) reported first-quarter adjusted earnings of $0.56 per share, surpassing the analyst consensus of $0.45.
Despite the earnings beat, the company's revenue saw a decline, coming in at $10.8 billion, a 9% decrease compared to the same period last year, but slightly above the consensus estimate of $10.71 billion. The company's stock saw a positive movement, inching up 1.8% following the announcement, indicating a modest market response to the earnings report.
The decrease in year-over-year revenue was attributed to a 10% drop in local price, although this was partially offset by a 1% increase in volume with gains across all regions except EMEAI. Excluding the Hydrocarbons & Energy segment, volume actually saw a more significant increase of 5% YoY.
On a sequential basis, the company experienced a 1% increase in sales, driven by improvements in the Performance Materials & Coatings and Industrial Intermediates & Infrastructure divisions.
Dow's operating EBIT for the quarter was $674 million, a decline from the previous year due to lower prices, but it marked an improvement from the prior quarter with a $115 million increase. This sequential rise was credited to gains in key business segments. Equity earnings also saw a substantial improvement both YoY and sequentially, with a $65 million and $24 million increase, respectively.
Cash flow from operating activities showed a downturn from the previous year and the prior quarter, attributed to a seasonal rise in working capital as sales increased throughout the quarter. The company continued to return value to shareholders, with $693 million distributed through dividends and share repurchases.
Dow's CEO commented on the results, highlighting the company's ability to deliver solid earnings despite pricing challenges and expressing confidence in their strategies moving forward.
While the company did not provide explicit financial guidance for the upcoming quarters in the press release, the current quarter's results and management's optimistic outlook may set the tone for future performance expectations. Investors will likely keep a close eye on how Dow navigates market conditions in the upcoming periods.
InvestingPro Insights
Dow (NYSE: DOW) has demonstrated resilience in its recent earnings report, beating analyst expectations on adjusted earnings per share. The company's proactive approach to shareholder value is evident, with management aggressively buying back shares, contributing to a high shareholder yield. This strategic move aligns with Dow's history of prioritizing shareholder returns, as indicated by an InvestingPro Tip that highlights the company's actions.
The company's stock is currently trading near its 52-week high, reflecting a strong market sentiment. This could be a result of the positive outlook from analysts, who have revised their earnings upwards for the upcoming period, as detailed in another InvestingPro Tip. These revisions suggest that the market has confidence in Dow's ability to maintain its profitability, which has been consistent over the last twelve months.
From a financial perspective, Dow's market capitalization stands at a robust 40.07 billion USD, with a revenue of 44.62 billion USD over the last twelve months as of Q1 2023. Despite a challenging environment marked by a 21.58% decline in revenue growth during the same period, the company maintains a notable gross profit margin of 11.33%. Investors should note that Dow's P/E ratio is currently at 31.08, which is considered high, indicating that the stock may be trading at a premium relative to earnings.
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