Dow Stock Just Clocked a Nearly 2-Year Low, Now What?

DOW becomes the first to achieve traceability and recycled content certification for PE compounds

Dow Inc. (NYSE:DOW) is a commodity chemical company with 35,700 employees maintaining operations across 104 manufacturing sites and 31 countries. The equity is coming up in the earnings confessional, scheduled to report second-quarter results before the open this coming Thursday, July 21. At last glance, DOW is trading up 1.6% at $49.65.

On Thursday, July 14, Dow announced that its post-consumer recycled-rich resins, REVOLOOP, are the first polyethylene compounds to be certified for plastics recycling traceability and recycled content. The certification was granted by AENOR, a global company that provides conformity assessments.

However, shares of DOW also hit a more than 52-week low of $48.27 on the same day as that announcement. Additionally, Dow stock is down 14% year-to-date and have fallen 17% just over the past month. Overall, Dow stock has decreased about 19% over the past 12 months and has shed 32% since reaching a 52-week high of $71.86 in early May.

Dow stock now offers an extremely high dividend yield of 5.64% with a forward dividend of $2.80. DOW now also provides a low valuation at a forward price-earnings ratio of 6.53 and a price-sales ratio of 0.66. Nonetheless, the commodity chemicals company comes with $15.97 billion in total debt, which is a significant amount relative to its market cap of $35.6 billion. Dow also holds just $3.39 billion in cash on their balance sheet.

The commodity chemicals company has struggled to find consistency in recent years, reporting a 40.3% decline in revenues for fiscal 2019 and a 10.3% decline in revenues for fiscal 2020. DOW also reported $1.36 billion in net losses for fiscal 2019, which marked a $5.86 billion decrease in net income. Furthermore, Dow is estimated to end fiscal 2022 with 8.3% revenue growth and a 10.4% decrease in earnings. The company is also expected to see a 2.8% decline in revenues and an 8.3% decrease in earning for fiscal 2023, which is in line with its past performance. In general, DOW’s declining business model makes Dow stock an unsafe long-term investment.