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 strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- DOW CHEMICAL has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, DOW CHEMICAL reported lower earnings of $0.71 versus $2.05 in the prior year. This year, the market expects an improvement in earnings ($2.37 versus $0.71).
- DOW, with its decline in revenue, slightly underperformed the industry average of 4.2%. Since the same quarter one year prior, revenues slightly dropped by 1.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, DOW's quick ratio is somewhat strong at 1.22, demonstrating the ability to handle short-term liquidity needs.
- The gross profit margin for DOW CHEMICAL is rather low; currently it is at 18.10%. Regardless of DOW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DOW's net profit margin of -4.53% significantly underperformed when compared to the industry average.
- Net operating cash flow has decreased to $1,551.00 million or 23.25% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
The Dow Chemical Company manufactures and supplies chemical products used as raw materials in the manufacture of customer products and services worldwide. Dow Chemical has a market cap of $40.27 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 47.8, above the S&P 500 P/E ratio of 17.7. Shares are up 0.5% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.
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