In two weeks, Motley Fool Income Investor recommendation Dow Chemical (NYSE:DOW) will report second-quarter earnings. Will there be another blowout upside like last quarter, or will high feedstock prices and a slowing economic boom put the hurt on the company's historically cyclical earnings?

Chemical companies have been enjoying strong revenue growth. Analysts expect Dow to post a 21.9% increase in revenue for the coming quarter (compared with the comparable quarter last year) -- a time when Dow's seasonal building-construction and agricultural-products markets kick into high gear.

Analyst earnings estimates are all over the board. The mean is $1.22 -- a whopping 71.8% increase. But the range of estimates from the 14 analysts runs from a low of $0.95 to a high of $1.40.

Driving the uncertainty in earnings is the price of ethylene, a key plastics ingredient. Plastics are the largest of Dow's six operating groups, contributing 25% of 2004 sales in 2004, but 38.7% of operating earnings. Fitch Ratings reports that ethylene prices decreased in both April and May.

High demand and strong prices for many products worked in Dow's favor, along with healthy worldwide economic growth, particularly outside Europe. (You might tire of hearing this, but think China and others). International sales composed 62% of total sales in 2004; the non-European portion of those sales represented 27% of the total.

In my opinion, weak ethylene prices may be moderated by pricing strength throughout the remainder of Dow's product line. This should keep earnings close to the mean analyst estimate, creating an increase somewhere around 70%. That's exceptional growth considering that the major diversified chemicals industry, which includes Dow, is expected to grow earnings by 25.4%. (Overall S&P 500 earnings are expected to grow 15.9%.)

Long-term investors should consider that the industry's usual boom-bust cycle may be muted this time. High construction costs and a shortage of building materials (which elongates construction times) have created a tight balance between industry supply and demand. Both grew at 4.6% from 1986 to 2003. Contrast that with Dow's five-year forecast that supply will grow 3.7% while demand surges 4.7%.

Dow's stock is up 18.7% over the past 52 weeks, handily beating the 7.7% increase in the S&P 500. The company pays a 2.9% dividend, is using its strong cash flow to reduce debt, and announced today that it has authorized the repurchase of 25 million of its own shares.

While Dow has an asbestos exposure through its 2001 purchase of Union Carbide, the stock sells for 10.2 times this year's estimated earnings and a miniscule 8.1 times 2006 estimates. That 2006 multiple compares favorably with rivals DuPont (NYSE:DD), BASF (NYSE:BF), and Eastman Chemical (NYSE:EMN), which trade at 14.1, 9.6, and 9.4 times forward earnings, respectively.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.