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Dow (DOW) Inks Four Renewable Power Purchase Agreements

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Dow Inc. (DOW - Free Report) announced that it signed four renewable power purchase agreements. Notably, it is expected to provide the company with access to 338 megawatts of installed wind and solar capacity.

The renewable energy generated from the deals is anticipated to lower more than 225,000 metric tons of CO2e and produce roughly 800,000 megawatt hours per year of energy.

Per management, the renewable energy purchase agreements will support Dow customers’ ability to lower value chain emissions. Notably, the agreements offset the usage of power from other sources and increase the use of renewables to power the company’s operations. The agreements include three solar energy deals near its sites in Brazil, Kentucky and Texas, and a deal to provide Dow’s site in Bahia Blanca, Argentina, with access to wind capacity.    

The agreements reflect the commitment of the company to pursue renewable energy supply in support of its recently announced targets to lower the net annual carbon emissions by five million tons by 2030 toward its goal of achieving carbon neutrality in 2050. Moreover, Dow is well on its way to exceed one of its 2025 Sustainability Goals i.e. to obtain 750 megawatts of its power demand from renewable sources.

Notably, each of the long-term renewable power agreements lowers the company’s Scope 2 carbon emissions. Moreover, it can help customers of Dow to attain their value chain emission reduction objectives and allow new renewable power generation capability in the region.

The company’s shares have lost 15.8% in the past year compared with the 15.2% decline recorded by the industry.



Dow, on its first-quarter earnings call, said that it is seeing indications of a recovery from the virus outbreak in China, while still assessing the impacts of the same in other major geographies. Factoring in a gradual and sustainable return of global economic activities, and the reopening of economies in May and June, the company expects recovery as the year progresses.

Dow also said that it is taking actions to further strengthen its financial position. These include the reduction of operating expenses by $350 million and further trimming of capital expenditure target to $1.25 billion (a $750-million reduction from that in 2019). The company is also temporarily idling certain manufacturing units to balance the production to the demand across markets, which have been significantly affected by restrained economic activities.

Dow Inc. Price and Consensus


Zacks Rank & Stocks to Consider

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

Some better-ranked companies in the basic materials space are AngloGold Ashanti Limited (AU - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .

AngloGold has a projected earnings growth rate of 109.9% for the current year. The company’s shares have surged around 55% in a year. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Barrick has a projected earnings growth rate of 54.9% for the current year. The company’s shares have rallied around 57% in a year. It currently has a Zacks Rank #2.

Agnico Eagle has an expected earnings growth rate of 53.6% for 2020. The company’s shares have gained 17.3% in the past year. It presently carries a Zacks Rank #2.

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