Dow Inc. Posts Another Quarterly Loss. Why the Stock Is Surging Anyway.

Coming into Thursday trading, Dow shares were down 46% year to date and down 58% over the past 12 months. (AFP via Getty Images)

Key Points

• Dow Inc. reported an adjusted third-quarter loss of 19 cents per share on sales of $10 billion, exceeding analyst expectations.
• Despite the loss, Dow’s shares rose 9.3% to $23.70 in early trading, reflecting low market expectations for the company.
• The company experienced a 1% year-over-year decline in volumes and a $461 million decrease in operating profit to $180 million.

Dow Inc. third-quarter earnings show the industrial economy remains weak. Shares are higher, however, because expectations are low.

The commodity chemicals producer reported an adjusted per-share loss of 19 cents from sales of $10 billion on Thursday morning. Wall Street was looking for a loss of 31 cents a share from sales of $10.2 billion. A year ago, in the third quarter of 2024, Dow reported adjusted earnings per share of 47 cents from sales of $10.9 billion.

Shares jumped 13% to $24.51 on Thursday, while the S&P 500 and Dow Jones Industrial Average gained 0.6% and 0.3%, respectively.

Sales don’t always matter as much in commodity chemicals. Many products are essentially priced at a spread over raw materials. Profits and margins matter more.

It’s an earnings beat, but things are still tough for the chemical maker. It’s the second consecutive adjusted loss. Sales declined in business segments. Volumes were down 1% year over year. Operating profit of $180 million was down $461 million year over year.

CEO Jim Fitterling noted “continued pressure across our industry.” Adding: “We remain confident that Dow is in a strong position to navigate this environment.”

The company has pockets of strength. Electronics and pharmaceutical businesses remain healthy, said Chief Financial Officer Jeff Tate. Interest rate-sensitive businesses, including housing and construction, remain weak.

Geographically, Europe remains a sore spot with below-average economic growth and high energy prices. Dow has announced the closure of some European facilities to help balance supply and demand.

For now, it’s about keeping costs low and waiting for a broad-based economic upturn.

The economy has punished Dow stock this year. Coming into Thursday trading, shares were down 46% year to date, and down 58% over the past 12 months.

Shares fell 17.5% after the company reported second-quarter per-share loss in July. Then, Dow management cut its dividend in half, to 35 cents a quarter, to preserve cash in the tough operating environment.

Write to Al Root at allen.root@dowjones.com