Based in Midland, Michigan, Dow Inc. (DOW) engages in the provision of various materials science solutions for various high-growth markets, including packaging, infrastructure, mobility, and consumer applications. Valued at a market cap of $35.7 billion, the company operates through Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure, and Performance Materials & Coatings segments.
Companies valued at $10 billion or more are generally labeled as “large-cap” stocks, and Dow fits this criterion perfectly. The company’s broad portfolio of higher-value functional polymers, significant low-cost global feedstock positions, global footprint, and market reach, as well as its large number of manufacturing sites, give it a competitive edge over the others.
Shares of DOW are trading 16.6% below its 52-week high of $60.69, hit on Apr. 4. DOW has declined 9.9% over the past three months, lagging behind the broader S&P 500 Index’s ($SPX) 2.5% gain over the same time frame.
Moreover, in the longer term, DOW stock is down 7.3% on a YTD basis, significantly lagging behind SPX’s 15.2% gains. Shares of DOW have declined 5.4% over the past 52 weeks, compared to SPX’s 23.3% return over the same time frame.
DOW has been trading below its 200-day moving average since August and has remained mostly below its 50-day moving average since June, indicating a bearish trend.
DOW’s underperformance is primarily driven by a challenging market environment over the past year, characterized by weak demand in some sectors and declining selling prices. Weak consumer spending and industrial activity in Europe, due to persistent geopolitical tensions further dampened investor confidence.
Moreover, the stock declined marginally following its weaker-than-expected Q2 earnings release on Jul. 25. This was driven by a 4% year-over-year decline in local prices and sluggish demand faced by the company in Europe and Asia.
DOW has also lagged behind its rival, LyondellBasell Industries N.V.’s (LYB) 1.4% decline on a YTD basis but has slightly outpaced LYB’s 5.6% decline over the past 52 weeks.
As DOW has underperformed the broader market, analysts remain cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts covering the stock, and the mean price target of $58.21 suggests a premium of 14.5% to its current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
