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Dow (DOW) Polyurethanes Accelerates Digital Transformation

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Dow Inc.’s (DOW - Free Report) business unit, Dow Polyurethanes, announced that it is fast tracking its digital transformation by integrating into artificial intelligence and predictive capabilities. This will increase its digital IQ across all business operations.

Further, Dow and Microsoft are collaborating to ramp up the integration of machine learning and AI solutions into an innovative predictive intelligence capability. This move will transform Dow’s product development process and improve customer collaboration.

One of the flagship digitalization programs implemented across the globe by the Polyurethanes business is Dow’s predictive intelligence capability. It drastically improves product formulation development process and ramps up the time-to-market of differentiated solutions.

Dow is expected to gain from Microsoft’s expertise. It is using Microsoft Azure Machine Learning for developing and integrating machine learning as well as AI into its predictive capability. Moreover, this will combine Dow’s reaction kinetics, materials science and rheology with AI to predict trends.

Dow’s shares have lost 15.7% year to date compared with 5.7% decline recorded by the industry.  

In July, Dow stated that it sees a gradual and uneven recovery based on what it has witnessed in the second quarter and in July. The company noted that its structural cost improvements along with disciplined approach to cash generation and capital allocation will help it capture significant value as markets recover.

Dow further noted that it will increase its operating expense reduction target for 2020 to $500 million from $350 million through additional structural cost actions. It will initiate a restructuring program, aiming more than $300 million in annualized EBITDA benefit by the end of next year. This includes a 6% reduction in its global workforce and actions to exit uncompetitive assets.

Zacks Rank & Key Picks

Dow currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space include Royal Gold, Inc. (RGLD - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Yamana Gold Inc. (AUY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Royal Gold has an expected earnings growth rate of 47.2% for 2020. The company’s shares have gained 1.7% in the past year.

Eldorado Gold has an expected earnings growth rate of 2,331.3% for 2020. Its shares have returned 18.6% in the past year.

Yamana has an expected earnings growth rate of 80% for 2020. The company’s shares have soared 62.9% in the past year.

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