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Dow (DOW) Shares Pop 18% in 6 Months: What's Driving the Stock?
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Shares of Dow Inc. (DOW - Free Report) have gained 17.6% over the past six months. The company has also outperformed its industry’s rise of 0.9% 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?
Dow remains focused 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 is also 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. DOW generated solid cash flow from operating activities (continuing operations) of $5.2 billion in 2023. 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 Denison Mines Corp. (DNN - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Innospec Inc. (IOSP - Free Report) .
Denison Mines beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 95% in the past year. DNN carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.94, indicating a year-over-year surge of 245.6%. 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 84% in the past year. CRS currently carries a Zacks Rank #2 (Buy).
The consensus estimate for Innospec’s current-year earnings is pegged at $6.72 per share, indicating a 10.3% year-over-year rise. IOSP, carrying a Zacks Rank #2, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 10.5%. The company’s shares have gained around 18% in the past year.
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Dow (DOW) Shares Pop 18% in 6 Months: What's Driving the Stock?
Shares of Dow Inc. (DOW - Free Report) have gained 17.6% over the past six months. The company has also outperformed its industry’s rise of 0.9% 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?
Dow remains focused 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 is also 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. DOW generated solid cash flow from operating activities (continuing operations) of $5.2 billion in 2023. 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 Denison Mines Corp. (DNN - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Innospec Inc. (IOSP - Free Report) .
Denison Mines beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 300%. The company’s shares have soared roughly 95% in the past year. DNN carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.94, indicating a year-over-year surge of 245.6%. 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 84% in the past year. CRS currently carries a Zacks Rank #2 (Buy).
The consensus estimate for Innospec’s current-year earnings is pegged at $6.72 per share, indicating a 10.3% year-over-year rise. IOSP, carrying a Zacks Rank #2, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 10.5%. The company’s shares have gained around 18% in the past year.