Mixed Earnings Expectations For Merger Hopefuls Dow And DuPont

• Two merging chemical giants are expected to report their earnings this week.
• Consensus Wall Street forecasts see very different results from each of them.
• Both have handily topped earnings estimates in recent quarters.

We are in the heart of the fourth-quarter earnings reporting season. Among the many companies on deck to share their latest results this week — including more than a third of the 30 Dow Jones Industrial Average components — are Dow Chemical Co DOW and E I Du Pont De Nemours And Co DD. These two are in the process of merging to form the world's largest agrochemical entity, which reportedly will later be split into three separate companies.

Note that these results are for the period in which there were questions about how the incoming administration might influence the merger and what part Warren Buffett and Berkshire Hathaway might play, and also DuPont faced more than $10 million in damages in a lawsuit. Also note that Citigroup upgraded both stocks to Buy at the beginning of the quarter, citing potential shareholder value unlocked by the merger/split plan.

Dow Chemical

When Dow Chemical shares its fourth-quarter results, the analysts on average predict that its earnings per share (EPS) will have shrunk a nickel from a year ago to $0.88. But the $12.37 billion in expected revenue would be about a 2 percent gain. Note that this Michigan-based company exceeded consensus EPS estimates by as much as nearly a third in the previous four quarters.

The forecast from eight Estimize respondents is in the same ballpark, with EPS expected to come in at $0.89. That would be down from the $0.91 posted in the prior quarter. And the consensus revenue estimate for the three months that ended in December is $12.47 billion. But Estimze overestimated on the top line in the previous quarter.

DuPont

Wall Street's consensus forecast for DuPont calls for EPS to have jumped from $0.27 in the same period of last year to $0.42. While the Delaware-based company likewise handily topped analysts' EPS expectations in recent quarters. The nine Estimize respondents are a bit more optimistic, with a consensus estimate of $0.44 per share in for the three months that ended in December.

Estimize nailed revenue estimates in the past two quarters, and this time the respondents are looking for $5.24 billion, a bit shy of the Wall Street consensus forecast for the fourth quarter of $5.29 billion. Either figure would be fractional decline from in the year-ago period, but the analysts so far see a more than 7 percent gain in the current quarter.

DuPont is scheduled to report its latest results before the opening bell on Tuesday, while Dow is expected to share its numbers first thing Thursday morning.

And Others

Other industrial giants, conglomerates and the like that are anticipated to report earnings growth this week include Alphabet, Freeport-McMoRan, General Dynamics, Honeywell International, Lockheed Martin, Raytheon, 3M and United Technologies. But if the analysts are correct, earnings at AT&T, Caterpillar, Ford and Halliburton will be smaller than a year ago, while those at Intel and Northrop Grumman are the same.

In the following week, look for quarterly reports from Amazon.com, Apple, Boston Scientific, Danaher, Delphi Automotive, Enterprise Products Partners, Exxon, Ingersoll-Rand, International Paper, Johnson Controls, LyondellBasell, Merck, Paccar, Pfizer, Philip Morris International, U.S. Steel, Weyerhaeuser and many more.

Image Credit: By Brian Reading - Own work, CC BY-SA 3.0, via Wikimedia Commons