Does Dow’s (DOW) Margin Recovery Signal Lasting Operational Strength Amid Persistent Sector Pressures?

• Dow Inc. recently reported third-quarter 2025 earnings, posting sales of US$9.97 billion and net income of US$62 million, both down from the prior year but surpassing analyst expectations for operating results. Despite industry-wide pressures, the company achieved sequential volume and margin improvements through growth investments and cost reduction actions.
• Analysts have highlighted that Dow’s performance reflects its focus on operational resilience, evident as segments like Industrial Intermediates and Infrastructure posted gains even as broader industry challenges persisted.
• To gauge the effect of Dow’s better-than-expected earnings, we’ll examine how sequential margin gains might shape the company’s investment narrative.

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Dow Investment Narrative Recap

To be a shareholder in Dow, you need to believe in the company's ability to grow earnings and margins through disciplined cost management, asset optimization, and navigating cyclical demand in chemicals and materials. The recent Q3 earnings beat was encouraging for operational resilience but does not materially change the biggest near-term catalyst, progress on asset and cost reviews, or the most critical risk, ongoing margin pressure from stubbornly high feedstock and energy costs.

Dow’s recent expansion of its European asset review is highly relevant, as it directly addresses capacity adjustments in response to weak regional demand and heightened regulatory challenges. This move may help enhance cash flow and provide a buffer against margin pressures, underlining management's focus on asset optimization amid persistent risks to profitability.

But investors should also consider how, if energy and feedstock costs remain elevated, the margin recovery story could face...

Read the full narrative on Dow (it's free!)

Dow's outlook anticipates $43.6 billion in revenue and $1.5 billion in earnings by 2028. This scenario implies a 1.4% annual revenue growth and a $2.5 billion increase in earnings from the current -$994.0 million.

Uncover how Dow's forecasts yield a $27.24 fair value, a 11% upside to its current price.

Exploring Other Perspectives

Fair value views from 11 members of the Simply Wall St Community range from US$20 to US$47.92 per share. While some buyers see exceptional value, others focus on Dow’s exposure to ongoing margin risks, highlighting why it’s important to compare alternative viewpoints before making decisions.

Explore 11 other fair value estimates on Dow - why the stock might be worth as much as 96% more than the current price!

Build Your Own Dow Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Dow research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Dow research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Dow's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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