Is Dow Inc. (DOW) A Risky Investment?

Dow Inc. (NYSE:DOW) traded with a subtraction of -$2.34 to $56.76 on Wednesday, a downside of -3.96 percent. An average of 5,042,513 shares of common stock have been traded in the last five days. There was a fall of -$1.92 in the past week. The last 20 days have seen an average of 6,115,438 shares traded, while the 50-day average volume stands at 4,682,807.

DOW stock has decreased by -4.86% in the last month. The company shares reached their 1-month lowest point of $55.21 on 09/21/21. With the stock rallying to its 52-week high on 05/18/21, shares of the company touched a low of $44.33 and a high of $71.38 in 52 weeks. In spite of this, the price is down -20.48% from the 52-week high.


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Insider Transactions

153 days have passed since Dow Inc. (DOW) last reported insider trading activity. Edmonds Ronald C, who is Controller and Vice President, most recently acquired $30,000 shares at $68.35 per share on May 06. In this transaction, the insider spent $2,050,500. Senior Vice President, HOLICKI PETER, disposed of 6,836 shares at a price of $55.99 on Nov 18. The insider now owns more than $382,761 worth of shares.

Valuation Metrics

Dow Inc. (DOW) has a trailing price-to-earnings (P/E) ratio of 10.87, which compares with the 17.00 for the broader industry and 12.82 for the sector. This means investors are optimistic about the stock’s future prospects. In the last five years, Dow Inc.’s PE ratio has ranged between 40.75 and 7.960. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 0.94, the price-to-book (PB) ratio at 2.83, and the price-to-cash flow ratio at 21.76.

Dow Inc. pays a $2.80 dividend per share annually. It offers a dividend yield of 4.93%. The company has a payout ratio of 51.10%. The company’s most recent quarterly dividend payment took place on Sep. 10, and it was $0.70 a share, without any change from last year. Its dividend has been increased for the last 1 consecutive years with the latest increase dividend $0.24 reported on Thursday April 11 2019. Dividends have grown by 102.90% each year over the last three years.

Financial Health

The quick ratio of Dow Inc. for the three months ended June 29 was 1.10, and the current ratio was 1.70, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.97 and a total debt to equity ratio of 1.01 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin is 17.10% against a 5-year average of 16.8%. Dow Inc.’s EBITDA margin for the year ending June 29 is 13.39%, while its operating margin for the same period stands at 9.10%. Its gross profit as reported stood at $5.2 billion compared to revenue of $38.54 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Dow Inc.’s return on assets was 6.70%. For the broader industry, ROE averaged 8.64 over the past year.

Earnings Surprise

The analyst consensus anticipated Dow Inc.’s latest quarter earnings to come in at $2.45 per share, but it turned out to be $2.72, a 11.00% surprise. For the quarter, EBITDA amounted to $3.1 billion. Shareholders own equity worth $745.77 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Dow Inc. (DOW) price momentum. RSI 9-day as of the close on 05 October was 39.83%, suggesting the stock is Neutral, with historical volatility in this time frame at 37.97%.

As of today, DOW’s price is $58.08 -3.26% or -$1.92 from its 5-day moving average. DOW is currently trading -6.24% lower than its 20-day SMA and -18.52% lower than its 100-day SMA. However, the stock’s current price level is -8.15% below the SMA50 and +2.23% above the SMA200.

The stochastic %K and %D were 52.72% and 54.25%, respectively, and the average true range (ATR) was 1.61. With the 14-day stochastic at 31.09% and the average true range at 1.57, the RSI (14) stands at 40.79%. The stock has reached -0.27 on the 9-day MACD Oscillator while the 14-day reading was at 0.34.

Analyst Ratings

Redburn launched coverage on Dow Inc. (NYSE: DOW) in its analyst report released on October 05, 2021. The firm assigned the stock a a Neutral rating.The consensus rating for Dow Inc. (DOW) among analysts is Overweight. According to current brokerage recommendations, 1 brokerage firm advise that investors sell DOW, while 14 suggest investors hold. There are 1 analyst who rate the stock as underweight. The stock is rated overweight by 1 analysts, while 8 others rate it as a “buy”.

What is DOW’s price target for the next 12 months?

Analysts predict a range of price targets between $54.00 and $85.00, with a median target of $69.00. Taking a look at these predictions, the average price target given by analysts for Dow Inc. (DOW) stock is $70.10.

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