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
WACCMarket 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)
 WACCBook  8.79%    7.21%
Enterprise value
EVMarket 68,192  84,959 EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash
 EVBook  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.
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

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/FCFOPS

\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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