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Dow (DOW) Shares Up 13% in 3 Months: What's Driving the Stock?
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Shares of Dow Inc. (DOW - Free Report) have gained 13.2% over the past three months. The company has also outperformed its industry’s rise of 8.5% over the same time frame. It has also topped the S&P 500’s roughly 5.4% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
Image Source: Zacks Investment Research
Cost and Growth Actions Aid DOW
Forecast-topping earnings performance in the second quarter of 2023 contributed to the gain in the company's shares. Its adjusted earnings of 75 cents per share for the quarter trounced the Zacks Consensus Estimate of 70 cents. Net sales of $11,420 million also surpassed the Zacks Consensus Estimate of $11,368.9 million.
Dow remains focused on executing its cost and productivity actions and maintaining operational discipline amid challenges from soft demand due to weak global economic activities. The company, in its second-quarter call, said that it will continue to execute its cost-savings actions and advance its longer-term strategic priorities as it faces a challenging macroeconomic environment in the second half of 2023.
Dow is realizing a full $300 million EBITDA run rate benefit from restructuring programs being initiated in the third quarter of 2020. The company also expects its investment in digital initiatives to drive efficiency and allow it to realize $300 million EBITDA run rate by the end of 2023. DOW is also implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Dow expects these initiatives to deliver $1 billion in cost savings in 2023. It delivered $250 million of savings under this program in the second quarter of 2023.
Moreover, Dow remains focused on investing in attractive areas through highly accretive projects. It is investing in several high-return growth projects including the expansion of downstream silicones capacity.
The company’s disciplined and balanced capital allocation priorities are also supporting its “Decarbonize and Grow” strategy to deliver long-term value creation for its shareholders. The company expects the Decarbonize and Grow strategy to increase underlying earnings by $3 billion annually.
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Hawkins, Inc. (HWKN - Free Report) and PPG Industries, Inc. (PPG - Free Report) .
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 81% in a year.
Hawkins currently carrying a Zacks Rank #1. It has a projected earnings growth rate of 18.9% for the current year.
Hawkins has a trailing four-quarter earnings surprise of roughly 25.6%, on average. HWKN shares are up around 60% in a year.
PPG Industries currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for PPG's current-year earnings has been revised 3.6% upward over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.3%, on average. PPG shares have gained around 11% in a year.
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Dow (DOW) Shares Up 13% in 3 Months: What's Driving the Stock?
Shares of Dow Inc. (DOW - Free Report) have gained 13.2% over the past three months. The company has also outperformed its industry’s rise of 8.5% over the same time frame. It has also topped the S&P 500’s roughly 5.4% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
Image Source: Zacks Investment Research
Cost and Growth Actions Aid DOW
Forecast-topping earnings performance in the second quarter of 2023 contributed to the gain in the company's shares. Its adjusted earnings of 75 cents per share for the quarter trounced the Zacks Consensus Estimate of 70 cents. Net sales of $11,420 million also surpassed the Zacks Consensus Estimate of $11,368.9 million.
Dow remains focused on executing its cost and productivity actions and maintaining operational discipline amid challenges from soft demand due to weak global economic activities. The company, in its second-quarter call, said that it will continue to execute its cost-savings actions and advance its longer-term strategic priorities as it faces a challenging macroeconomic environment in the second half of 2023.
Dow is realizing a full $300 million EBITDA run rate benefit from restructuring programs being initiated in the third quarter of 2020. The company also expects its investment in digital initiatives to drive efficiency and allow it to realize $300 million EBITDA run rate by the end of 2023. DOW is also implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Dow expects these initiatives to deliver $1 billion in cost savings in 2023. It delivered $250 million of savings under this program in the second quarter of 2023.
Moreover, Dow remains focused on investing in attractive areas through highly accretive projects. It is investing in several high-return growth projects including the expansion of downstream silicones capacity.
The company’s disciplined and balanced capital allocation priorities are also supporting its “Decarbonize and Grow” strategy to deliver long-term value creation for its shareholders. The company expects the Decarbonize and Grow strategy to increase underlying earnings by $3 billion annually.
Dow Inc. Price and Consensus
Dow Inc. price-consensus-chart | Dow Inc. Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Hawkins, Inc. (HWKN - Free Report) and PPG Industries, Inc. (PPG - Free Report) .
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 81% in a year.
Hawkins currently carrying a Zacks Rank #1. It has a projected earnings growth rate of 18.9% for the current year.
Hawkins has a trailing four-quarter earnings surprise of roughly 25.6%, on average. HWKN shares are up around 60% in a year.
PPG Industries currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for PPG's current-year earnings has been revised 3.6% upward over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 7.3%, on average. PPG shares have gained around 11% in a year.