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DOW Partners New Energy Blue for Renewable Plastic Materials

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Dow Inc. (DOW - Free Report) and New Energy Blue recently signed a long-term supply arrangement in North America under which the latter will produce bio-based ethylene from renewable agricultural residues. Dow plans to buy this bio-based ethylene, which will reduce carbon emissions from plastic manufacture and can be utilized in recyclable applications such as transportation, footwear and packaging.

Dow's deal with New Energy Blue, which is staffed by bio-conversion experts, is the first in North America to generate plastic source materials from corn stover. This is also Dow's first North American deal to use agricultural residue for plastic production.

Further, this deal provides Dow with similar commercial supply alternatives for the next four New Energy Blue projects, allowing the latter to increase production while assisting farmers by providing a steady market for agricultural remainders. Every year, the five projects are expected to displace about 1 million tons of greenhouse gas (GHG) emissions.

Dow will enhance its use of renewable yet recyclable resources under this deal, transforming these into items that people use every day. The agreement is expected to also help cut carbon emissions from agriculture by utilizing this otherwise squandered carbon because corn stover emits carbon dioxide into the environment as it decomposes.

Dow's supply arrangement with New Energy Blue is expected to provide farmers with significant economic value by providing a dependable new market. Every year, New Energy Blue's upcoming Iowa processing factory will source corn stover directly from local farmers.

Shares of DOW have lost 27.2% over the past year compared with 12.2% decline of its industry.

Zacks Investment Research
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On its first-quarter call, Dow said that its disciplined execution has enhanced its ability to navigate the impact of higher inflation on consumer demand and weak global economic activity through the balance of 2023. The company expects continued benefits from its operational and cost actions as it progresses through the year. It is making progress with its actions to deliver $1 billion in cost savings in 2023. DOW is benefiting from its advantaged feedstock positions. It expects oil and gas spreads to further support its strategic cost-advantaged positions.

Dow Inc. Price and Consensus

Dow Inc. Price and Consensus

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

Zacks Rank & Key Picks

DOW currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks to consider in the basic materials space include Koppers Holdings Inc. (KOP - Free Report) , AngloGold Ashanti Limited (AU - Free Report) and Linde plc (LIN - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Koppers currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for current-year earnings for KOP is currently pegged at $4.40, implying year-over-year growth of 6.3%. It has a trailing four-quarter earnings surprise of roughly 13.64%, on average. KOP has gained around 7.4% in a year.

AngloGold Ashanti currently carries a Zacks Rank #2. The Zacks Consensus Estimate for AU’s current-year earnings has been revised 22% upward in the past 60 days. The consensus estimate for current-year earnings for AU is currently pegged at $1.94, suggesting year-over-year growth of 50.4%. AngloGold Ashanti’s shares have surged roughly 37.4% in the past year.

Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days. Linde beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 9.3% in the past year.

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