Dow Inc. (DOW) Moves 9.3% Higher: Will This Strength Last?

Dow Inc. (DOW) shares rallied 9.3% in the last trading session to close at $37.58. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.1% gain over the past four weeks.

DOW’s rally appears to reflect the recent surge in oil prices amid concerns over supply disruptions due to the war in the Middle East that has crippled the global supply chain, boosting the company’s competitive cost advantage. Citigroup also reportedly upgraded DOW to “Buy” from “Neutral” and raised its price target to $40.

This materials science is expected to post quarterly loss of $0.34 per share in its upcoming report, which represents a year-over-year change of -1800%. Revenues are expected to be $9.46 billion, down 9.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Dow Inc., the consensus EPS estimate for the quarter has been revised 2.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on DOW going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Dow Inc. belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Methanex (MEOH), closed the last trading session 8.6% higher at $58.06. Over the past month, MEOH has returned 8.6%.

For Methanex, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.92. This represents a change of -29.2% from what the company reported a year ago. Methanex currently has a Zacks Rank of #3 (Hold).

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

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