Dow Inc. (DOW) 10-K Red Flags
Risk signals extracted deterministically from Dow Inc.’s SEC 10-K/10-Q XBRL filings — no LLM, every finding cites the underlying data.
Detected red flags (16)
- Receivables outpacing revenue: Accounts receivable grew +0.8% YoY vs revenue growth of -21.6%. The +22.4% spread suggests extended credit terms, channel stuffing risk, or collection deterioration. Investigate the allowance for doubtful accounts and DSO trend.
- Inventory buildup exceeds sales growth: Inventory grew +7.7% vs revenue -21.6%. Excess inventory may signal weakening demand, potential write-downs, or supply chain overcommitment. Watch gross margin for discounting impact.
- Free cash flow deteriorating: FCF declined +49.8% YoY (from $5.65B to $2.84B). With OCF at $5.20B and capex at $2.36B, cash generation capacity is weakening — monitor for dividend/buyback sustainability.
- Interest coverage deteriorating below 3x: Interest coverage fell from 7.01x to 0.88x. Operating income of $660.0M covers interest of $746.0M only 0.88x — approaching the threshold where debt service becomes constrained. Monitor for covenant breaches.
- Material weakness in internal controls: The term "material weakness" appears in 7 recent filing(s) (vs 2 in the prior period). This risk language is ongoing.
- Deferred revenue growing — future revenue visibility: Deferred revenue grew +25.1% to $244.0M, providing forward revenue visibility. This is a positive leading indicator for subscription or contract-based businesses.
- Endogenous analysis: Revenue grew -21.6% but receivables grew +0.8% — the receivables-to-revenue gap suggests growth may be partially driven by extended credit terms rather than genuine demand. If DSO continues to rise, a revenue reversal or bad-debt charge could follow.
- Endogenous analysis: Free cash flow declined despite stable or rising capex, indicating the cash burn is operational rather than investment-driven. This is a structural concern — cost reduction or asset sales may be needed to restore FCF.
- 20 disclosure(s) dropped from prior year — reduced reporting granularity.
- Ongoing high-severity risk language: Material weakness in internal controls.
- Revenue declined **+21.6%** YoY to $44.62B.
- 5-year revenue CAGR **+0.8%**.
- Price $27.71 — downtrend (below 200-DMA); 1-month momentum negative.
- RSI(14) 11.76 (oversold).
- Receivables outpacing revenue: Accounts receivable grew +0.8% YoY vs revenue growth of -21.6%. The +22.4% spread suggests extended credit terms, channel stuffing risk, or collection deterioration. Investigate the allowance for doubtful accounts and DSO trend.
- Inventory buildup exceeds sales growth: Inventory grew +7.7% vs revenue -21.6%. Excess inventory may signal weakening demand, potential write-downs, or supply chain overcommitment. Watch gross margin for discounting impact.
Filings & ownership
- Latest annual report (10-K) filed Feb 3, 2026.
- Latest quarterly report (10-Q) filed Apr 24, 2026.
- 17 recent 8-K material-event filings in the index.
- Recent insider Form 4s: 0 buy vs 0 sell transactions.
- ~10,000+ recent 13F-HR filings reference Dow Inc.; broad institutional reporting.
- Recent filers include Parallax Volatility Advisers, L.P., GSB Wealth Management, LLC, MEYER HANDELMAN CO.
- 4 recent 13D activist/beneficial-ownership filings — potential catalyst.
- 16 recent 13G passive institutional ownership notices.
Full DOW analyst report
Valuation (DCF & Graham), technicals, macro exposure, risk scorecard and 13F/13D ownership.
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