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 ( TheStreet) -- Dow Chemical (NYSE: DOW) 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 growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- DOW CHEMICAL has improved earnings per share by 31.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in 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 ($2.30 versus $0.71).
- DOW, with its decline in revenue, slightly underperformed the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- DOW's debt-to-equity ratio of 0.96 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 1.12 is sturdy.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Chemicals industry average, but is greater than that of the S&P 500. The net income increased by 27.8% when compared to the same quarter one year prior, rising from $497.00 million to $635.00 million.
- The gross profit margin for DOW CHEMICAL is rather low; currently it is at 22.20%. 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 4.41% is significantly lower than the industry average.
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