Dow & Shell Collaborate to Develop E-Cracking Technology

Dow Inc. DOW inked a joint development deal with Shell to speed up the development of technology that can electrify ethylene steam crackers.

Notably, using renewable electricity instead of fossil fuel combustion to heat steam cracker furnaces could become one of the routes to decarbonize the chemicals industry.

The partnership between Dow and Shell is underway, and brings together their complementary knowledge and a shared commitment to a low-carbon future. Notably, innovation project teams in Amsterdam, Terneuzen, the Netherlands, and Texas are focused on designing and scaling ‘e-cracker’ technologies. In the coming years, the teams will first prove the technologies in laboratory and pilot activities, after which commercial crackers will follow.

Per Dow’s management, significant technological breakthroughs are required to lower the industry’s energy use and greenhouse gas emissions. For that to happen, companies need to come out of their comfort zones, and collaborate to accomplish bold and innovative new goals. Notably, Dow’s partnership with Shell is a vital step in making this vision a reality.

The company’s shares have lost 14.9% in the past year compared with the 14.7% 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

 

Dow Inc. Price and Consensus

Dow Inc. price-consensus-chart | Dow Inc. Quote

Zacks Rank & Stocks to Consider

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

Some better-ranked companies in the basic materials space are Agnico Eagle Mines Limited AEM, AngloGold Ashanti Limited AU and Franco-Nevada Corporation FNV

Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 53.6% for 2020. The company’s shares have gained 23.4% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

AngloGold Ashanti has an expected earnings growth rate of 112.1% for 2020. The company’s shares have gained 54.3% in the past year. It presently flaunts a Zacks Rank #1.

Franco-Nevada has a projected earnings growth rate of 19.2% for the current year. The company’s shares have rallied around 61% in a year. It currently has a Zacks Rank #2 (Buy).

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Last year, it generated $24 billion in global revenues. By 2020, it’s predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce “the world’s first trillionaires,” but that should still leave plenty of money for regular investors who make the right trades early.

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