Dow Jones Stock: Strategic Moves and Earnings Recovery Signal Turnaround Potential in 2025

The market is buzzing with talk of turnarounds, and Dow Inc. (DOW) has become a case study in how a legacy industrial giant is trying to navigate a brutal earnings environment. Let's break it down:

Strategic Positioning: Cutting Costs and Focusing on Core Strengths

Here's the deal: When a company like Dow Inc. is bleeding cash, you don't just hope for better times-you force better times. In Q2 2025, management made some hard but necessary calls. The 50% dividend cut might sting short-term investors, but it's a lifeline for preserving liquidity. Meanwhile, the $2.4 billion from the Diamond Infrastructure Solutions divestiture isn't just a cash injection-it's a signal that Dow is willing to shed non-core assets to fund its future.

And let's not forget the European asset shutdowns. Yes, it's painful to shutter operations, but those $200 million annual EBITDA uplifts by 2029 are a clear roadmap. This isn't just cost-cutting; it's about realigning the business to focus on regions and products where it can dominate. The Poly 7 polyethylene train in Freeport, Texas, is a prime example-selling out high-value specialty markets means Dow isn't just chasing volume anymore.

Earnings Recovery: A Path, But Not a Guarantee

The numbers tell a mixed story. Q2 2025 was a disaster: a $10.1 billion net sales drop (7% YoY) and an $801 million net loss. But here's the twist: Management is projecting a $100 million sequential EBITDA improvement in Q3 2025, driven by margin recovery and new asset contributions. That's not just optimism-it's math.

The broader market is also giving Dow a tailwind. The Dow Jones Industrial Average hit a record high in Q3 2025, up 5.22% to 46,397.89, as noted in the Q3 2025 market update, fueled by AI-driven growth and Fed rate cuts. Components like UnitedHealth Group and Apple are pulling the index higher, and if the Fed keeps cutting rates, that momentum could lift Dow's stock too.

However, historical context from recent earnings events adds nuance. A backtest of DOW's performance around earnings releases from 2022 to 2025 reveals that a simple buy-and-hold strategy near these dates has yielded limited upside. Over 197 events, the stock showed an average cumulative abnormal return of −1.3% at day 30 post-announcement, with win rates hovering near 45–50%-suggesting no consistent edge for investors relying on earnings-driven timing (Backtest results). This underscores the importance of focusing on Dow's structural reforms rather than short-term volatility.

Risks and Realities

But here's the rub: Dow's legal troubles could derail this turnaround. Securities class actions over financial disclosures are a red flag for investor confidence (see the DOW Q3 2025 earnings coverage). And while the Packaging & Specialty Plastics segment saw price recovery in June, trade uncertainties linger. Tariffs and geopolitical tensions remain wild cards that could crush margins again.

The Bottom Line

Dow's turnaround hinges on execution. The $400 million cost savings target and $200 million EBITDA uplifts are aggressive but achievable. If the company sticks to its playbook-divesting non-core assets, cutting costs, and focusing on high-margin products-it could see a meaningful rebound by 2026.

However, investors shouldn't ignore the risks. The legal battles and macroeconomic headwinds are real. For now, Dow is a high-conviction play for those who believe in its strategic clarity and the broader market's resilience.