Is It Too Late To Reassess Dow (DOW) After Its Strong Year To Date Rally?

Simply Wall St.

Feb 15

If you are wondering whether Dow's share price still offers value or if the easy gains are behind it, starting with a clear look at its current valuation can help ground your view before you make any ...

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The stock last closed at US$32.49, with returns of 2.2% over 7 days, 15.0% over 30 days and 33.9% year to date, set against a 9.7% decline over 1 year and a 33.2% decline over 3 years. Recent attention on Dow has focused on how the market is reassessing large chemicals and materials companies, with investors weighing their role in manufacturing supply chains and industrial activity. This shift in focus helps frame the contrast between the stock's shorter term strength and its weaker multi year record. On our valuation checks Dow scores 5 out of 6, and you can see the breakdown in our valuation score. We will unpack this using several common methods before finishing with a way to assess value that many investors overlook.  Find out why Dow's -9.7% return over the last year is lagging behind its peers. AdvertisementApproach 1: Dow Discounted Cash Flow (DCF) Analysis A Discounted Cash Flow, or DCF, model takes estimates of future cash flows a company might generate and discounts them back to today, aiming to arrive at an implied value for the share. For Dow, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is a loss of about $1.7b, which means the model leans heavily on future estimates rather than recent cash generation. Analyst input goes out to 2028, with projected free cash flow of $875 million in that year. Simply Wall St then extrapolates further out to 2035 using those inputs. On this basis, the DCF model arrives at an estimated intrinsic value of about $53.81 per share, compared with the recent share price of $32.49. That implies a 39.6% discount, which suggests the shares screen as undervalued using this method alone. Result: UNDERVALUED Our Discounted Cash Flow (DCF) analysis suggests Dow is undervalued by 39.6%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks. DOW Discounted Cash Flow as at Feb 2026 Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Dow. Approach 2: Dow Price vs Sales For companies where earnings can be volatile, the P/S ratio is often a useful cross check because it compares the share price with the revenue the business generates, rather than its bottom line. It gives you a cleaner view when profits are affected by cycles, write downs or other one off items. What counts as a reasonable P/S multiple usually reflects how quickly revenue is expected to grow and how risky that revenue stream looks. Higher expected growth or more resilient sales can support a higher multiple, while lower growth or higher risk tends to justify a lower one. Dow currently trades on a P/S of 0.58x, compared with a Chemicals industry average of 1.20x and a peer average of 0.79x. Simply Wall St also calculates a Fair Ratio of 0.94x for Dow. This Fair Ratio is a proprietary estimate of the P/S level that might be appropriate for the company after considering its growth profile, profit margins, risk factors, industry and market cap, so it can be more tailored than a simple peer or sector comparison. On this basis, Dow's actual 0.58x P/S sits below the 0.94x Fair Ratio, suggesting the shares screen as undervalued using this method. Result: UNDERVALUED NYSE:DOW P/S Ratio as at Feb 2026 P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies. Upgrade Your Decision Making: Choose your Dow Narrative Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can use Narratives to link your view of Dow's story to a set of revenue, earnings and margin forecasts, compare the Fair Value that falls out of that story with the current share price, and see how different perspectives range from a more cautious Narrative built around a US$20.00 Fair Value with revenue declining 1.0% a year and margins reaching 3.8%, to a more optimistic Narrative with a US$41.52 Fair Value, revenue growing 3.3% a year and margins reaching 4.4%. All of this updates automatically as new news or earnings are reflected in the platform. For Dow, however, we will make it really easy for you with previews of two leading Dow Narratives: Each one takes the same company data and recent news, then builds a different story about what those numbers could mean for the share price over time. Your job is not to pick the one that sounds best, but to see which set of assumptions lines up more closely with how you think the next few years play out. 🐂 Dow Bull Case Fair Value in this bullish Narrative: US$41.52 per share Implied discount to this Fair Value versus the last close of US$32.49: about 21.8% Revenue trend assumption: 3.29% annual growth  Assumes Dow trims and simplifies its asset base, then benefits as demand returns, with higher margins and earnings supported by cost cuts, portfolio clean up, and delayed large projects that free up cash. Sees growth coming from higher margin plastics and specialty materials tied to urbanisation, emerging markets, and new recycling and low carbon materials that can support premium pricing. Builds to earnings of about US$2.0b by around 2028, with a P/E of 19.8x on those earnings and a Fair Value of US$41.52 that sits toward the top of current analyst targets.  🐻 Dow Bear Case Fair Value in this bearish Narrative: US$22.00 per share Implied downside to this Fair Value versus the last close of US$32.49: about 47.7% Revenue trend assumption: 0.35% annual decline  Assumes long lasting pressure from decarbonisation policies, single use plastics rules, and oversupply in key chemicals, which keeps a lid on volumes and squeezes margins. Highlights high reinvestment needs, regulatory costs, and the recent 50% dividend cut as signs that free cash flow and shareholder returns could stay constrained. Builds to earnings of about US$1.5b by around 2028, on a P/E of 12.6x, and lands at a Fair Value of US$22.00, which matches the low end of current analyst targets.  If you want to see how other investors are joining the dots between these kinds of assumptions and their own Fair Values for Dow, you can use the full range of Narratives on the Simply Wall St Community page to pressure test your view against both bullish and bearish cases. Curious how numbers become stories that shape markets? Explore Community Narratives Do you think there's more to the story for Dow? Head over to our Community to see what others are saying! NYSE:DOW 1-Year Stock Price Chart  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}