Dow (DOW) has completed a multi year share buyback, repurchasing 38,539,462 shares for US$2,069.24 million, equal to 5.43% of its stock, following the release of its second quarter 2026 earnings.
See our latest analysis for Dow.
Dow's latest buyback and stronger second quarter earnings come after a mixed share price patch, with the stock posting a 7 day share price return of 5.46% but a 90 day share price return that declined 20.07%, while the 1 year total shareholder return of 29.70% contrasts with a 3 year total shareholder return that declined 33.06%. This suggests recent momentum has picked up following a weaker multi year period.
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Dow has enjoyed a sharp rebound on the back of better earnings and a completed buyback, but the stock is still trading below analyst targets and some intrinsic estimates. This raises the question of how much of the potential return may still be ahead rather than behind.
Most Popular Narrative: 27.5% Undervalued
With Dow last closing at $30.90 against a narrative fair value of $42.63, the current setup frames a sizable valuation gap that hinges on a few core execution and industry swing factors.
Dow is delaying construction on the Path2Zero project in Fort Saskatchewan, which aligns with their strategy to adjust capital spending in response to market conditions, potentially improving near-term cash flow and margins due to reduced CapEx. The company is expanding their strategic review of European assets, planning to idle or shut down three initial assets. This move aims to optimize asset utilization and enhance near-term cash flow, potentially improving earnings by reducing excess capacity and focusing on higher-margin operations.
Want to understand why this narrative still points to meaningful upside for Dow? The entire fair value hinges on a specific path for revenue, margins and earnings that is far from conservative. Curious which assumptions really do the heavy lifting in that model, and how they link back to Dow's capital decisions and polyethylene exposure?
Result: Fair Value of $42.63 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, the Dow narrative still carries meaningful risk, with elevated feedstock and energy costs and potential demand softness both capable of eroding the expected margin recovery.
Find out about the key risks to this Dow narrative.
Next Steps
If the mixed sentiment around Dow has you thinking, this is a good time to review the full picture and form your own judgment using the 3 key rewards and 2 important warning signs.
Looking for more investment ideas beyond Dow?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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