Dow (DOW) recently declared a quarterly dividend of $0.35 per share, payable on September 11, 2026, to shareholders of record as of August 31, 2026, drawing fresh attention to the stock.

The dividend decision comes as Dow's recent share price performance has been mixed, with the stock up 2.34% on a 1-day basis and 5.90% over 7 days, yet showing a 90-day share price return that declined 19.42%. Over the year to date the share price return of 28.02% contrasts with a 1-year total shareholder return of 39.96%. Longer term total shareholder returns over 3 and 5 years are both down more than 30%, which suggests recent momentum has picked up after a tougher multi year period.

If this dividend story has you looking beyond a single stock, it could be a good moment to scan other materials focused plays through our dedicated screener of 9 top copper producer stocks

After a sharp rebound in Dow shares over the past year, the real issue now is simple. Is this recent strength just catching up to fair value, or is the market still pricing in more upside than the fundamentals support?

Preferred Price-to-Sales of 0.5x: Is it justified?

On simple sales based metrics Dow looks inexpensive. The stock last closed at $31.07 while trading on a P/S ratio of 0.5x that screens below both sector and peer benchmarks.

The P/S ratio compares a company’s market value to its revenue. For a large materials group like Dow, where earnings can swing around the cycle and the company is currently loss making, this measure helps investors compare what the market is paying for each dollar of sales versus competitors.

Dow’s 0.5x P/S ratio sits well below the US Chemicals industry average of 1.2x and also below the identified peer group average of 0.8x. Relative to an estimated fair P/S ratio of 1.1x, the current discount is wide and indicates that the market is valuing Dow’s revenue stream at a lower level than both its peers and a regression based fair level.

Result: Price-to-sales of 0.5x (UNDERVALUED)

However, Dow still faces risks from its recent net income loss of $1,301m and the possibility that its 2.31% revenue growth does not persist.

Another view on Dow’s value

The first check on Dow focused on its 0.5x P/S ratio, which screens as inexpensive against peers and a fair ratio of 1.1x. Yet our DCF model points to a fair value of $40.69 per share compared with a market price of $31.07, which also suggests undervaluation. Which signal do you trust more: price to sales or future cash flows?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Dow for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed signals on Dow so far, with both risks and potential rewards in play, mean it makes sense to review the full picture yourself while sentiment is still shifting. Start with the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Dow?

If Dow has sharpened your focus on valuation and income, do not stop here. Use targeted stock lists to widen your opportunity set before the next move.

• Spot underpriced companies with solid fundamentals by scanning our list of 52 high quality undervalued stocks that could fit a value focused approach.
• Strengthen your portfolio foundation by reviewing solid balance sheet and fundamentals stocks screener (51 results) that may better handle tough conditions.
• Get ahead of the crowd by checking the screener containing 20 high quality undiscovered gems that the broader market might not be watching yet.

This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.