Cramer and Liveris spoke about Dow's transformation from a commodity company to a specialty chemical company.
Liveris said that Dow views productivity as "a journey, not a destination." To that end, the company continually takes a "less is more" approach and focuses on technology and its customers. For example, Dow's portfolio of products functions regardless of the price of oil, which had not been the case for the company in the past.
Cramer asked Liveris about Europe, and the CEO said demand exists in countries such as Germany. With a strong dollar, he added, Europe's economy is finally progressing.
Dow is currently in the process of spinning off its chlorine business. Liveris noted that Dow started in the chlorine business, but the company has come to understand that its capital should be invested more in higher-growth areas.
Insight from TheStreet's Research Team:
Dow Chemical is a core holding of Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. During the most recent weekly roundup, this is what Jim Cramer, Portfolio Manager and Jack Mohr, Director of Research - Action Alerts PLUS had to say about the stock:
Dow Chemical ( DOW:NYSE; $51.69; 1,750 shares; 3.47%; Sector: Materials): The shares were up this week following a strong earnings report last week in which EPS beat by 11%. Not only was first-quarter 2015 Dow's tenth straight quarter of EPS, EBITDA and EBITDA margin growth, it was also its best margin quarter since 2005, a testament to the company's revamped portfolio characterized by innovation-driven growth, differentiated products and more sustainable pricing.
While EPS will likely be down 4% in 2015 due to FX, lower olefins spreads and Sadara start-up costs, as well as the fact that buybacks have been suspended until the chlor-alkali transaction is closed (year-end), we see upside in 2016 as buybacks resume ($5 billion-plus) and recent project startups (Sadara, PDH) drive a resumption of growth. We also view the valuation as attractive, with the shares trading at just over 14x estimated 2016 EPS. Our target is $60.
- Jim Cramer and Jack Mohr, ' Weekly Roundup' originally published 5/1/2015 on ActionAlertsPLUS.com.
Want more information like this from Jim Cramer and Jack Mohr BEFORE your stock moves? Learn more about ActionAlertsPLUS.com now.
Separately, TheStreet Ratings team rates DOW CHEMICAL as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DOW CHEMICAL (DOW) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 40.9% when compared to the same quarter one year prior, rising from $1,049.00 million to $1,478.00 million.
- The debt-to-equity ratio is somewhat low, currently at 0.89, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- DOW CHEMICAL has improved earnings per share by 49.4% 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 $2.86 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $2.86).
- DOW, with its decline in revenue, slightly underperformed the industry average of 14.1%. Since the same quarter one year prior, revenues fell by 14.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: DOW Ratings Report