Dow Chemical Co. (NYSE: DOW – $61.31), looking to complete its merger with rival DuPont Co., swung to a loss in the most recent quarter, though adjusted earnings grew more than expected. During the quarter the company opted to book a more than $1 billion pretax charge to account for future asbestos-related expenses covering the next 40 years. Sales in plastics, Dow’s largest segment, grew 4% to $4.8 billion while the infrastructure solutions segment surged 41% to $2.4 billion and performance material and chemical sales edged up 1% to $2.41 billion. Excluding this charge and other items, the company’s earnings grew 6% to $0.99 a share, up from $0.93 a year earlier on a 14% jump in revenue to $13.02 billion. Analysts had forecast earnings of $0.88 on $12.38 billion in revenue. Dow Chemical says it is confident it can solve European Commission regulatory issues related to the DuPont deal, which has been delayed to close after March of this year.
Looking ahead, Dow sees first quarter revenue of $12.25 billion – $13.25 billion, which is higher than most analysts’ estimates of about $11.9 billion. The shares offer solid total return potential for the pull to 2019-2021. This should be supported by a healthy dividend yield (currently 3.0%) and rising earnings out to late decade. The company’s diversified portfolio ought to perform fairly well over the long haul.