Stock Analysis & Valuation Dow Inc. (2OY.DE)

• Previous Close: €23.40
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	15.70	-33
Intrinsic value (DCF)	13.07	-44
Graham-Dodd Method		n/a
Graham Formula	6.20	-74

Strategic Investment Analysis

Company Overview

Dow Inc. (2OY.DE) is a leading materials science company headquartered in Midland, Michigan, with a global footprint and 37,000 employees. Operating through three key segments—Performance Materials & Coatings, Industrial Intermediates & Infrastructure, and Packaging & Specialty Plastics—Dow delivers innovative solutions for industries such as coatings, home and personal care, adhesives, and food packaging. The company leverages its extensive R&D network, including eight global research centers, to drive sustainable and high-performance product development. As a major player in the Basic Materials sector, Dow serves diverse applications, emphasizing durability, efficiency, and environmental responsibility. Listed on Deutsche Börse (XETRA), Dow combines scientific expertise with scalable production to meet global demand for advanced industrial and consumer materials.

Investment Summary

Dow Inc. presents a mixed investment profile. With a market cap of €17.6B and steady revenue of €42.96B (FY 2024), the company benefits from diversified end markets and strong R&D capabilities. However, its net income of €1.12B and diluted EPS of €1.59 reflect margin pressures, possibly due to volatile raw material costs. The dividend yield (~5.2% based on €2.68/share) is attractive, but high total debt (€17.64B) and moderate operating cash flow (€2.91B) warrant caution. Beta of 0.94 suggests relative stability versus the broader market, but exposure to cyclical industries like packaging and construction could limit upside in economic downturns.

Competitive Analysis

Dow Inc. competes in the capital-intensive industrial materials sector, where scale, innovation, and cost efficiency are critical. Its competitive advantage lies in its diversified portfolio and global R&D infrastructure, enabling tailored solutions for high-growth niches like sustainable packaging. However, Dow faces stiff competition from firms with lower-cost production bases (e.g., Asian players) and rivals with stronger specialty chemical focus. The company’s debt load could constrain agility in pricing wars or M&A opportunities. Its Performance Materials segment competes on technology but is vulnerable to raw material price swings, while Packaging & Specialty Plastics benefits from secular trends like e-commerce but contends with regulatory pressures on single-use plastics. Dow’s vertical integration and customer partnerships provide stability, but margin erosion in commoditized products remains a risk.

Major Competitors

• BASF SE (BAS.DE): BASF is Dow’s largest European rival, with broader exposure to agrochemicals and a stronger balance sheet (lower leverage). Its integrated ‘Verbund’ production system offers cost advantages, but Dow outperforms in packaging innovation and North American market penetration.
• LyondellBasell Industries (LYB): LyondellBasell rivals Dow in plastics and intermediates, with superior EBITDA margins due to leaner operations. However, Dow’s R&D focus and coatings segment provide more diversification. Both face similar cyclical risks in petrochemicals.
• DuPont de Nemours (DD): DuPont emphasizes high-margin specialty materials (e.g., electronics, water filtration), unlike Dow’s bulk chemicals. Dow’s scale in packaging is a counterweight, but DuPont’s lighter debt profile and tech-driven growth give it an edge in premium markets.
• Saudi Basic Industries Corp. (SABIC.AB): SABIC benefits from state-subsidized feedstock costs, undercutting Dow on commodity plastics pricing. Dow’s innovation and sustainability initiatives offset this in value-added segments, but SABIC’s expansion in Asia poses a long-term threat.