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Dow (DOW) Shares Up 12% in 3 Months: What's Driving the Stock?
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Shares of Dow Inc. (DOW - Free Report) have gained 11.6% over the past three months. The company has also outperformed its industry’s rise of 1.8% over the same time frame.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
Image Source: Zacks Investment Research
What’s Going in DOW’s Favor?
Forecast-topping earnings performance in the fourth quarter of 2023 contributed to the gain in the company's shares. DOW’s adjusted earnings of 43 cents per share for the quarter topped the Zacks Consensus Estimate of 40 cents. Net sales of $10,621 million also surpassed the Zacks Consensus Estimate of $10,316.3 million.
Dow focuses on maintaining cost and operational discipline. It is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Its targeted actions delivered $1 billion in cost savings for full-year 2023. The company also expects its investment in digital initiatives to drive efficiency and allow it to realize $300 million EBITDA run rate by 2025.
The company also 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.
Dow’s disciplined and balanced capital allocation priorities are also supporting its Decarbonize and Grow strategy to deliver long-term value creation for its shareholders. It is advancing its Decarbonize and Grow and Transform the Waste strategies, which are expected to deliver more than $3 billion in underlying earnings annually by 2030.
The company received a definitive green light from its Board in November 2023 for its Fort Saskatchewan Path2Zero initiative, marking a significant milestone in its commitment to building the world's inaugural net-zero Scope 1 and 2 emissions-integrated ethylene cracker and derivatives facility in Alberta, Canada.
The project is expected to generate $1 billion in EBITDA growth annually throughout the economic cycle and decarbonize 20% of Dow's global ethylene capacity. The investment positions Dow to meet increasing demand in lucrative markets such as packaging, infrastructure and hygiene, with additional potential gains from the commercialization of low and zero-emission products.
Moreover, the company is committed to return value to its shareholders by leveraging healthy cash flows. It returned $2.6 billion to its shareholders in 2023 through dividends and share buybacks. Dow has adequate liquidity of roughly $13 billion and no substantial debt maturities until 2027.
Better-ranked stocks worth a look in the basic materials space include, Alpha Metallurgical Resources Inc. (AMR - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. AMR delivered a trailing four-quarter earnings surprise of roughly 24.8%, on average. Its shares are up around 106% in a year. AMR currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 29% in the past year. CRS currently carries a Zacks Rank #1.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 70% in the past year.
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Dow (DOW) Shares Up 12% in 3 Months: What's Driving the Stock?
Shares of Dow Inc. (DOW - Free Report) have gained 11.6% over the past three months. The company has also outperformed its industry’s rise of 1.8% over the same time frame.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
Image Source: Zacks Investment Research
What’s Going in DOW’s Favor?
Forecast-topping earnings performance in the fourth quarter of 2023 contributed to the gain in the company's shares. DOW’s adjusted earnings of 43 cents per share for the quarter topped the Zacks Consensus Estimate of 40 cents. Net sales of $10,621 million also surpassed the Zacks Consensus Estimate of $10,316.3 million.
Dow focuses on maintaining cost and operational discipline. It is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Its targeted actions delivered $1 billion in cost savings for full-year 2023. The company also expects its investment in digital initiatives to drive efficiency and allow it to realize $300 million EBITDA run rate by 2025.
The company also 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.
Dow’s disciplined and balanced capital allocation priorities are also supporting its Decarbonize and Grow strategy to deliver long-term value creation for its shareholders. It is advancing its Decarbonize and Grow and Transform the Waste strategies, which are expected to deliver more than $3 billion in underlying earnings annually by 2030.
The company received a definitive green light from its Board in November 2023 for its Fort Saskatchewan Path2Zero initiative, marking a significant milestone in its commitment to building the world's inaugural net-zero Scope 1 and 2 emissions-integrated ethylene cracker and derivatives facility in Alberta, Canada.
The project is expected to generate $1 billion in EBITDA growth annually throughout the economic cycle and decarbonize 20% of Dow's global ethylene capacity. The investment positions Dow to meet increasing demand in lucrative markets such as packaging, infrastructure and hygiene, with additional potential gains from the commercialization of low and zero-emission products.
Moreover, the company is committed to return value to its shareholders by leveraging healthy cash flows. It returned $2.6 billion to its shareholders in 2023 through dividends and share buybacks. Dow has adequate liquidity of roughly $13 billion and no substantial debt maturities until 2027.
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, Alpha Metallurgical Resources Inc. (AMR - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. AMR delivered a trailing four-quarter earnings surprise of roughly 24.8%, on average. Its shares are up around 106% in a year. AMR currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 29% in the past year. CRS currently carries a Zacks Rank #1.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 70% in the past year.