Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
-- Dow Chemical
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 85.15% to $1,472.00 million when compared to the same quarter last year. In addition, DOW CHEMICAL has also vastly surpassed the industry average cash flow growth rate of 0.84%.
- DOW, with its decline in revenue, slightly underperformed the industry average of 2.0%. Since the same quarter one year prior, revenues slightly dropped by 9.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- DOW's debt-to-equity ratio of 0.89 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.11 is sturdy.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- DOW CHEMICAL's earnings per share declined by 34.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DOW CHEMICAL increased its bottom line by earning $2.05 versus $1.73 in the prior year. For the next year, the market is expecting a contraction of 4.9% in earnings ($1.95 versus $2.05).
The Dow Chemical Company manufactures and supplies chemical products used as raw materials in the manufacture of customer products and services worldwide. The company has a P/E ratio of 18.9, below the average conglomerates industry P/E ratio of 19.1 and above the S&P 500 P/E ratio of 17.7. Dow Chemical has a market cap of $35.85 billion and is part of the
industry. Shares are up 3.9% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.