DOW's Shares Rise 16% YTD: How Should You Play the Stock?

Dow Inc.’s DOW shares have gained 15.5% so far this year. It has been gaining from its cost-reduction and productivity improvement efforts, strategic expansion in high-growth markets and feedstock advantages in the Americas, even as it navigates a challenging macroeconomic environment.Dow has perfo…

Dow Inc.’s DOW shares have gained 15.5% so far this year. It has been gaining from its cost-reduction and productivity improvement efforts, strategic expansion in high-growth markets and feedstock advantages in the Americas, even as it navigates a challenging macroeconomic environment.

Dow has performed in line with the Zacks Chemicals Diversified industry’s 15.4% rise while topping the S&P 500’s increase of 9.7% year to date. Among its peers, LyondellBasell Industries N.V. LYB, Eastman Chemical Company EMN and BASF SE BASFY have gained 21.4%, 5.1% and 2.3%, respectively, over the same period.

DOW’s YTD Price Performance

Technical indicators show that DOW has been trading below the 50-day simple moving average (SMA) since May 18, 2026. The stock slipped below the 200-day SMA on June 24, 2026. Following a golden crossover on Feb. 5, 2026, the 50-day SMA continues to read higher than the 200-day SMA, indicating a bullish trend.

Dow’s Shares Trade Below 50-Day SMA

Let’s take a look at DOW’s fundamentals to analyze the stock better.

High-Return Growth Projects & Self-Help Actions Aid Dow

DOW benefits from its differentiated portfolio and advantaged feedstock positions in the Americas. It remains focused on investing in attractive areas. Its broad portfolio, significant low-cost feedstock positions, global footprint and market reach place it in an advantageous position against competitors. While Dow faces headwinds from heightened macroeconomic and geopolitical uncertainties, it remains focused on growth actions in attractive end markets and executing high-return incremental growth projects in cost-advantaged regions.

DOW recently entered into a landmark agreement with Xylem to develop and operate advanced water systems at the Fort Saskatchewan, Alberta, Canada, manufacturing complex. The initiative further expands collaboration between these companies, supporting the advancement of DOW's Path2Zero initiative. The company also announced a series of targeted investments totaling approximately $100 million through 2027 to strengthen its global specialty silicones manufacturing and innovation. The initiative aims to support rising demand in fast-growing sectors such as mobility, electronics, and healthcare while enhancing supply chain resilience globally.

Dow is taking action to cut costs by $1 billion to drive margins. It expects to achieve the majority of the cost savings through reductions in direct and labor costs. Dow realized more than $400 million of benefits from these actions in 2025, with the remaining benefits expected by 2026.

DOW has launched the “Transform to Outperform” initiative to improve productivity, reduce complexity, streamline its end-to-end processes and enable improved returns. The plan targets at least $2 billion near-term operating EBITDA improvement, with two-thirds of the benefits expected to be realized from productivity improvements. The company expects EBITDA benefits of roughly $500 million from this program in 2026. It expects to deliver roughly $1.1 billion in benefits from self-help actions this year.

Dow, on its first-quarter call, stated that it is already witnessing strong positive momentum from its recently implemented pricing actions across all businesses and regions, along with supportive improvements in operating rates. The company added that it is leveraging its purpose-built asset base, established supply-chain networks and strong operational reliability to continue prioritizing customers while navigating challenges related to the Middle East conflict.

DOW’s Solid Financial Health Supports Capital Allocation

DOW has a strong balance sheet and generates substantial cash flows, which enable it to finance its growth investments in higher-value businesses and regions, and drive shareholder value. It ended the first quarter with solid liquidity of around $14 billion, including cash and cash equivalents of roughly $4.1 billion. It generated solid cash flow from operating activities of roughly $1.1 billion in the first quarter.

DOW returned $1.5 billion to shareholders through dividends in 2025. Dow has a policy of returning roughly 45% of its operating net income through dividends. It paid $252 million in dividends in the first quarter. It has no substantial long-term debt maturities until 2029.

DOW offers a healthy dividend yield of 5.1% at the current stock price compared with 5.2% for LyondellBasell, 3.5% for BASF and 5% for Eastman Chemical.

Soft Demand Conditions and Cost Pressures Ail DOW

Dow is exposed to headwinds from a tepid demand environment. Lower consumer spending amid inflationary pressures is affecting demand in Europe. Construction and manufacturing activities remain soft in the region. Demand in Asia has been affected by a weaker demand recovery in China. The property sector in China remains sluggish, with declining new home prices.

Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure, including residential construction, also remains weak. Dow is also seeing softness in automotive in Europe due to weak demand. Higher costs are also expected to impact the U.S. automotive market in 2026. Weak conditions across these markets are likely to impact volumes in second-quarter 2026.

The company faces headwinds from higher feedstock costs in Asia and Europe. The Middle East conflict and the blockade of the Strait of Hormuz have led to significant supply disruptions and feedstock cost pressure in these regions. Elevated feedstock and energy costs are likely to impact margins in the second quarter.

Dow also faces headwinds from turnaround costs and operational issues in the second quarter. It sees a $60 million headwind from higher maintenance activities at one of its crackers in the U.S. Gulf Coast, impacting the Packaging & Specialty Plastics unit. Also, another $50 million headwind is expected in the Industrial Intermediates & Infrastructure division from higher planned maintenance activity. Higher maintenance activity at one of its monomers facilities is also expected to pose a $35 million headwind in Performance Materials & Coatings.

Positive Analyst Sentiment for DOW Stock

The Zacks Consensus Estimate for DOW’s 2026 earnings has been going up over the past 60 days. The consensus estimate for second-quarter 2026 earnings has also been revised upward over the same time frame.

The Zacks Consensus Estimate for 2026 earnings is currently pegged at $3, suggesting a year-over-year rise of 419.2%. Earnings are expected to increase roughly 411.9% in the second quarter.

DOW Trades at a Discount

DOW is currently trading at a forward price-to-sales ratio of 0.44, below the industry. DOW is also trading at a discount to LyondellBasell, BASF and Eastman Chemical.

DOW’s P/S F12M Vs. Industry, LYB, BASFY and EMN

Final Thoughts: Hold Onto DOW Shares

Dow benefits from its differentiated portfolio and advantaged low-cost feedstock position in the Americas, which strengthens its competitive edge. Its disciplined and balanced capital allocation strategy supports long-term growth while maintaining a strong focus on cost control and operational efficiency. Backed by a solid balance sheet and healthy cash flow generation, Dow is well-positioned to fund growth investments and enhance shareholder value. However, DOW is exposed to weak demand in a challenging environment as well as cost headwinds, which may weigh on its near-term performance. Investors who already hold this Zacks Rank #3 (Hold) stock may be best served by maintaining their positions.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report