Dow Chemical Company

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker	Analyst	Analyst Email
Nomura Research	Aleksey Yefremov	aleksey.yefremov@nomura.com
RBC Capital Markets	Arun Viswanathan	arun.viswanathan@rbccm.com
Credit Suisse	Christopher S. Parkinson	christopher.parkinson@credit-suisse.com
Deutsche Bank Research	David Begleiter	david.begleiter@db.com
Susquehanna Financial Group	Don Carson	don.carson@sig.com
Wells Fargo Securities	Frank J. Mitsch	frank.mitsch@wellsfargo.com
Monness Crespi Hardt	Herbert Hardt	hhardt@mchny.com
SunTrust Robinson Humphrey	James Sheehan	james.sheehan@suntrust.com
Jefferies	Laurence Alexander	lalexander@jefferies.com

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Primary Input Data

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Derived Input Data

Derived Input	Label	2015 Value	2016 Value	Equational Form
Net Operating Profit Less Adjusted Taxes	NOPLAT	4,063	3,862	$NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)$
Free Cash Flow	FCF	3,767	1,611	$FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS$
Tax Shield	TS	208	2	$TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income$
Invested Capital	IC	56,811	66,907	$IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital$
Return on Invested Capital	ROIC	7.15%	5.77%	$ROIC\,=\,\frac { NOPLAT }{ IC }$
Net Investment	NetInv	2,129	12,958	$NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation$
Investment Rate	IR	52.41%	333.56%	$IR\,=\,\frac {NetInv}{NOPLAT}$
Weighted Average Cost of Capital	WACC_Market	17.72%	15.30%	$WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)$
Weighted Average Cost of Capital	WACC_Book	8.79%	7.21%
Enterprise value	EV_Market	68,192	84,959	$EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash$
Enterprise value	EV_Book	65,138	83,150
Long-Run Growth	g = IR x ROIC	3.75%	19.37%	Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
Long-Run Growth	g = % $\Delta$ GDP	2.50%	2.50%
Margin from Operations	M	12.80%	12.35%	$M\,\,=\,\,\frac{EBIT}{SALES}$
Depreciation/Amortization Rate	D	28.74%	32.51%	$D\,\,=\,\,\frac{D+A}{EBITDA}$

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form	Observed Value		Single-stage multiple g solution		Two-stage valuation model g solution
Equational Form	12/31/2015	12/31/2016	12/31/2015	12/31/2016	12/31/2015	12/31/2016
EV/SALES $\frac {EV}{Sales} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)$	1.40	1.77	70.49%	50.64%	26.94%	22.96%
EV/EBITDA $\frac {EV}{EBITDA} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)$	7.77	9.65	70.49%	50.64%	26.94%	22.96%
EV/NOPLAT $\frac {EV}{NOPLAT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}$	16.79	22.00	70.49%	50.64%	26.94%	22.96%
EV/FCF_OPS $\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	18.10	52.74	70.49%	50.64%	26.94%	22.96%
EV/EBIT $\frac {EV}{EBIT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	10.91	14.30	70.49%	50.64%	26.94%	22.96%
EV/IC $\frac {EV}{IC} \,= \,\frac{ROIC\, -\, g}{WACC\,-\,g}$	1.20	1.27	70.49%	50.64%	26.94%	22.96%

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