DOW Lost 21% In A Week. Do You Buy Or Wait?

Dow (DOW) stock is down 21.2% in 5 trading days. While history suggests price dips recover, there is risk – specific to growth, profitability, balance sheet and downturn resilience. Consider the following data:

• A $17 Bil company with $43 Bil in revenue currently trading at $23.92.
• Last 12 month revenue growth of -2.1% and operating margin of 3.2%.
• Has Debt to Equity ratio of 1.1 and Cash to Assets ratio of 0.0
• Currently trading at P/E multiple of 57.7 and P/EBIT multiple of 10.5
• Has returned (median) 55.4% within a year following sharp dips since 2010. See DOW Dip Buy Analysis.

While we like to buy dips if the fundamentals check out – for DOW, see Buy or Sell DOW Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and DOW drops another 20-30% to $16.74 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.

Below is a deep dive into Dow (DOW) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared much worse than the S&P 500 index during various economic downturns.

DOW provides materials science solutions across packaging, infrastructure, and consumer care markets globally, offering chemicals, coatings, adhesives, elastomers, and performance materials.

2022 Inflation Shock

• DOW stock fell 38.5% from a high of $70.61 on 4 May 2022 to $43.39 on 26 September 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $60.51 on 7 February 2023 , and currently trades at $23.92

• DOW stock fell 59.8% from a high of $54.73 on 1 January 2020 to $22.00 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 18 November 2020

• DOW stock fell 38.9% from a high of $66.65 on 31 August 2017 to $40.71 on 23 August 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 5 May 2021

• DOW stock fell 86.7% from a high of $47.67 on 19 July 2007 to $6.33 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 February 2014