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Dow (DOW) Partners With Auto Suppliers for Sustainable Solutions

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Dow Inc. (DOW - Free Report) announced a collaboration with leading automotive suppliers, Adient and Autoneum, to introduce a mass-balance approach to the production of new polyurethane solutions built on a circular feedstock, sourced from a waste product of the mobility sector that replaces virgin fossil-fuel-based feedstock. The products based on circular feedstock are Specflex C and Voranol C, which will initially be offered to the mobility sector through this partnership.

These products are designed to help automotive OEMs meet their sustainability goals of providing circular products. They also come with a certification from an independent mass-balance certification agency. The use of a mass-balance approach and recycled feedstock will offer polyurethane-based products that match the performance of existing products while reducing the dependency on fossil feedstock.

Dow is of the view that the mass-balance is a very effective and proven technique for automotive OEMs to accomplish their goals. Its zeal to create circular products enables it to continuously innovate and expand its offerings to incorporate more circular feedstock. It is capable of meeting customer demand for sustainable products without compromising product performance. Specflex C and Voranol C come with features like flexible foam systems and low- to high-density foams that will well-position the company toward its goal of circular and viable options.

Adient, one of the partners in the pioneering project, noted that the joint venture is a major milestone on the trajectory of de-carbonization of vehicles by re-using waste products to reduce fossil-based feedstock usage while maintaining the level of quality.

Autoneum, another partner, said that the products have set new sustainability standards, also adding value to its portfolio of more sustainable foam-based components. They are capable of offering the same benefits while reducing the carbon footprint of cars. The use of recycled automotive waste is in line with the company’s continuous efforts toward exploring shorter and more sustainable raw-material supply chains.

Shares of Dow have surged 57.8% in a year, higher than the industry’s growth of 49.5%. The company’s estimated earnings growth rate for the current year is pegged at 326.5%.

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The company, in its last earnings call, noted that it expects its businesses to benefit from the ongoing economic recovery, supported by the progress in vaccine distribution and tight market fundamentals. It is well placed for sustained value creation throughout this year and beyond, on the back of its geographic scale, advantageous cost positions, differentiated feedstock flexibility, leadership position in high-growth markets and top-quartile cash generation.

Dow Inc. Price and Consensus

Dow Inc. Price and Consensus

Dow Inc. price-consensus-chart | Dow Inc. Quote

Zacks Rank & Other Key Picks

Currently, Dow carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the basic materials space are Cabot Corporation (CBT - Free Report) , Olin Corporation (OLN - Free Report) and Tronox Holdings PLC (TROX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot has a projected earnings growth rate of 125.9% for the current year. The company’s shares have risen 56.7% in a year.

Olin has a projected earnings growth rate of 506.7% for the current year. The company’s shares have soared 310.7% in a year.

Tronox has a projected earnings growth rate of 242.9% for the current year. The company’s shares have jumped 209.2% in a year.

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