DOW Q2 Earnings Beat Estimates on Higher Pricing and Self-Help Actions

Net sales rose 19.7% year over year to around $12.1 billion and beat the consensus estimate of $11.6 billion by 3.8%. Local prices increased 20%, while volume declined 1% as planned maintenance weighed on Packaging & Specialty Plastics.

GAAP net income was $802 million in the reported quarter compared with a net loss of $801 million a year ago. Operating EBITDA increased to $2.3 billion from $703 million.

DOW’s Segment Highlights

Packaging & Specialty Plastics sales rose 27% year over year to $6,385 million. The figure fell behind our estimate of $6.7 billion. Volume fell 4% due to declines in both businesses, including higher planned maintenance in Hydrocarbons & Energy, which reduced merchant sales. Lower polyethylene volumes in EMEAI and Asia Pacific also reflected the Middle East conflict. Higher polyethylene and olefins prices more than offset the volume pressure.

Industrial Intermediates & Infrastructure sales increased 14% year over year to $3.2 billion. The figure surpassed our estimate of $3.04 billion. Volume declined 2% as lower demand in Polyurethanes & Construction Chemicals, including the effects of the Middle East conflict, outweighed growth in Industrial Solutions. Industrial Solutions volumes benefited from recent alkoxylation investments and increased demand for data center applications.

Performance Materials & Coatings sales advanced 11% year over year to $2.4 billion. The figure beat our estimate of $2.2 billion. Volume grew 6%, supported by gains across both businesses and strength in downstream silicones. Consumer Solutions benefited from higher demand across consumer, electronics and home care applications, while Coatings & Performance Monomers recorded increased acrylic monomers and architectural coatings volumes.

DOW’s Financials

Cash flow from operating activities for continuing operations was $1.3 billion, reversing the year-ago use of $470 million. The improvement was primarily driven by higher earnings across all businesses, which more than offset an expected working capital build associated with revenue growth.

Cash and cash equivalents were $3.97 billion as of June 30, 2026, up from $3.8 billion at the end of 2025. Shareholder returns through dividends totaled $253 million during the quarter.

DOW's Outlook

Dow expects approximately $200 million in additional benefits from Transform to Outperform during 2026. This raises the company’s expected total in-year benefits from self-help initiatives to more than $1.3 billion.

For the second half of 2026, management plans to focus on growth and innovation in attractive end markets, investments to strengthen the portfolio and balanced capital allocation. Dow expects the growth and productivity benefits from Transform to Outperform to accelerate through the remainder of 2026 and into 2027.

DOW’s Stock Price Performance

DOW’s shares have gained 24.7% in the past year against the industry’s decline of 0.8%.

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DOW’s Zacks Rank & Key Picks

DOW currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS, Kronos Worldwide, Inc. KRO and Avient Corporation AVNT.

Carpenter Technology is slated to report fourth-quarter 2026 results on July 30. The Zacks Consensus Estimate for earnings is pegged at $10.58 per share, indicating 41.44% year-over-year growth. CRS sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Kronos is scheduled to report second-quarter fiscal 2026 results on Aug. 5. The Zacks Consensus Estimate for KRO’s second-quarter loss per share is pegged at 33 cents, indicating 65.63% year-over-year growth. KRO flaunts a Zacks Rank #1 at present.

Avient is slated to report second-quarter 2026 results on Aug. 6. The consensus estimate for AVNT’s earnings per share is pegged at $3.08. AVNT presently carries a Zacks Rank #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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