Dow Chemical's second-quarter earnings miss triggered a 10% decline in its stock price - not because it missed badly (Q2 earnings per share of 54 cents only fell short by 2 cents) but because everyone else thrashed estimates so handily.
On July 27, DuPont posted earnings per share (EPS) of $1.17, beating Wall Street estimates of $0.93 by a wide margin. On July 30, Eastman Chemical followed up with Q2 EPS of $2.05, blowing away Street estimates of $1.65. PolyOne, Westlake and Arch Chemicals followed up with earnings beats as well.
Plus, leading up to Dow's earnings release on August 3, investors bid up the company's stock in anticipation of another earnings beat. And why not? Dow had built a solid history of exceeding Wall Street earnings expectations, having done so in the previous three quarters - and in spectacular fashion.
Unplanned outages led to a 7-cent hit to Dow's EPS, noted Deutsche Bank analyst David Begleiter. Adjusting for this, Dow would have beat estimates, but not by much.
Lastly, Dow's bullish outlook was slightly more muted than some of its peers, with CEO Andrew Liveris expressing a "guardedly optimistic" view of the US economy, and growth continuing in emerging markets, "although at a tempered pace."
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