Will Dow (USA Stocks:DOW) investors stop to exit in February?

DOW Stock

USD 52.06 0.80 1.56%

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Dow Inc is scheduled to announce its earnings today. Dow Tangible Asset Value is fairly stable at the moment as compared to the past year. Dow reported Tangible Asset Value of 46.21 Billion in 2022. Working Capital is likely to climb to about 8.5 B in 2023, whereas Earnings Before Interest Taxes and Depreciation Amortization EBITDA are likely to drop slightly above 7.7 B in 2023. While many traders are getting carried away by overanalyzing chemicals space, it is reasonable to focus on Dow Inc as an investment alternative. We will evaluate why recent Dow price moves suggest a bounce in February.

Published over a month ago

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Reviewed by Michael Smolkin

Dow Inc has 14.28 B in debt with debt to equity (D/E) ratio of 0.79, which is OK given its current industry classification. The entity has a current ratio of 1.58, which is typical for the industry and considered as normal. Debt can assist Dow until it has trouble settling it off, either with new capital or with free cash flow. So, Dow's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Dow Inc sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Dow to invest in growth at high rates of return. When we think about Dow's use of debt, we should always consider it together with cash and equity.

Will Dow (USA Stocks:DOW) investors stop to exit in February?

Dow financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Dow, including all of Dow's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Dow assets, the company is considered highly leveraged. Understanding the composition and structure of overall Dow debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.

Please read more on our technical analysis page.

Understanding Dow Total Liabilities

Dow Inc liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Dow Inc has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Dow balance sheet include debt obligations and money owed to different Dow vendors, workers, and loan providers. Below is the chart of Dow short long-term liabilities accounts currently reported on its balance sheet.

You can use Dow Inc financial leverage analysis tool to get a better grip on understanding its financial position

How important is Dow's Liquidity

Dow financial leverage refers to using borrowed capital as a funding source to finance Dow Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Dow financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Dow's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.

It is good to see analyst projects for Dow, but it might be worth checking our own buy vs. sell analysis

A Deeper look at Dow

The latest climb in Dow short term price appreciation could raise concerns from sophisticated investors as the firm is trading at a share price of 57.89 on 5,490,091 in volume. The company directors and management have successfully maneuvered the firm at convenient times to take advantage of all market conditions in December. The stock standard deviation of daily returns for 90 days investing horizon is currently 1.92. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.

Liabilities Breakdown

15.3 B

Current Liabilities

29.9 B

Long-Term Liabilities

	Total Liabilities	55.56 Billion
	Current Liabilities	15.32 Billion
	Long-Term Liabilities	29.92 Billion
	Tax Liabilities	1.01 Billion

Dow has a small chance to finish above USD59 in 2 months

Latest mean deviation is at 1.38. Dow Inc has relatively low volatility with skewness of 0.68 and kurtosis of 1.54. However, we advise all investors to independently investigate Dow Inc to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Dow's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Dow's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

While other entities under the chemicals industry are still a bit expensive, Dow may offer a potential longer-term growth to sophisticated investors. With an optimistic outlook on your 90 days horizon, it may be a good time to trade new shares of Dow or increase your existing holdings in the Stock as it seems the potential growth has not yet been fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Dow.

Editorial Staff

Gabriel Shpitalnik is a Member of Macroaxis Editorial Board. Gabriel is a young entrepreneur and writes predominantly on the business, technology, and finance sector. He likes to analyze different equity instruments across a wide range of industries focusing primarily on consumer products and evolving technologies. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Dow Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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