Dow Earnings: Weak Macroeconomic Environment Weighs on Results; Shares Undervalued

Narrow-moat Dow continued to face headwinds across end markets and geographies. Despite exceeding fourth-quarter sales guidance, the company posted a 22% revenue contraction for fiscal 2023. All three segments contributed equally to the decline. Firmwide EBITDA margin also fared poorly, averaging 12% for the year, compared with 21% in 2022. We’re slightly lowering our fair value estimate to $68 from $69 following the results, but shares remain undervalued at the time of writing. We view Dow’s recent performance as a reflection of a weak macroeconomic environment worldwide. While we don’t foresee near-term relief, we remain optimistic about Dow’s long-run prospects.