Dow (DOW) Shares Up 18% in 6 Months: What's Driving the Stock?
Shares of Dow Inc. DOW have shot up 17.7% over the past six months. The company has also outperformed its industry’s rise of 12.7% over the same time frame. It has also topped the S&P 500’s roughly 8.9% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
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What’s Aiding DOW?
Dow is benefiting from higher demand across a number of markets including mobility, renewable energy and pharmaceutical. It is also witnessing firm global demand in functional polymers and performance silicones. The momentum across these markets is likely to continue moving ahead.
The company is also gaining from cost synergy savings and productivity actions. It focuses on maintaining cost and operational discipline. Dow expects its investment in digital initiatives to drive efficiency and allow it to realize $300 million EBITDA run rate by the end of 2023. The company is also implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Dow expects these initiatives to deliver $1 billion in cost savings in 2023.
Moreover, Dow 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. The company completed its Fort Saskatchewan expansion in 2021, which is expected to support higher polyethylene demand. It also commissioned its fluidized catalytic dehydrogenation pilot plant in Louisiana in fourth-quarter 2022 to manufacture propylene for coatings, electronics and durables markets. It also delivered silicones downstream debottlenecking projects last year.
The company is also committed to return value to its shareholders by leveraging healthy cash flows. Dow generated strong operating cash flows of $7.5 billion in 2022. It also generated free cash flow of roughly $5.7 billion for the year. The company returned $4.3 billion to its shareholders in 2022 through dividends and share buybacks.
Dow Inc. Price and Consensus
Dow Inc. price-consensus-chart | Dow Inc. Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, Olympic Steel, Inc. ZEUS and Yamana Gold Inc. AUY.
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 37.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has gained around 32% in a year.
Olympic Steel currently sports a Zacks Rank #1. The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 60.6% upward in the past 60 days.
Olympic Steel’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 26.2%, on average. ZEUS has rallied around 39% in a year.
Yamana Gold currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AUY’s current-year earnings has been revised 3.8% upward in the past 60 days.
Yamana Gold beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 22.5% on average. AUY’s shares have gained roughly 6% in the past year.
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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
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Olympic Steel, Inc. (ZEUS) : Free Stock Analysis Report
