Daqo New Energy (NYSE:DQ) & Sumco (OTCMKTS:SUOPY) Critical Analysis

Daqo New Energy (NYSE:DQ) and Sumco (OTCMKTS:SUOPY) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Earnings and Valuation

This table compares Daqo New Energy and Sumco”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Daqo New Energy	$2.31 billion	0.50	$429.55 million	($1.85)	-9.46
Sumco	$3.04 billion	0.82	$453.58 million	$0.80	17.71

Sumco has higher revenue and earnings than Daqo New Energy. Daqo New Energy is trading at a lower price-to-earnings ratio than Sumco, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Daqo New Energy and Sumco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Daqo New Energy	-9.16%	-1.90%	-1.68%
Sumco	5.25%	3.25%	1.83%

Risk and Volatility

Daqo New Energy has a beta of 0.25, indicating that its share price is 75% less volatile than the S&P 500. Comparatively, Sumco has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Daqo New Energy and Sumco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Daqo New Energy	0	1	4	3	3.25
Sumco	0	0	0	0	0.00

Daqo New Energy currently has a consensus target price of $22.26, indicating a potential upside of 27.16%. Given Daqo New Energy’s stronger consensus rating and higher probable upside, equities analysts plainly believe Daqo New Energy is more favorable than Sumco.

Insider & Institutional Ownership

47.2% of Daqo New Energy shares are held by institutional investors. Comparatively, 0.0% of Sumco shares are held by institutional investors. 24.3% of Daqo New Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Sumco beats Daqo New Energy on 9 of the 15 factors compared between the two stocks.

About Daqo New Energy

Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufacturers in the People's Republic of China. Its products are used in ingots, wafers, cells, and modules for solar power solutions. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is based in Shanghai, the People's Republic of China.

About Sumco

Sumco Corporation manufactures and sells silicon wafers for the semiconductor industry in Japan, the United States, China, Taiwan, Korea, and internationally. It provides monocrystalline ingots, as well as polished, annealed, epitaxial, junction isolated, silicon-on-insulator, and reclaimed polished wafers. The company was formerly known as Sumitomo Mitsubishi Silicon Corp. and changed its name to Sumco Corporation in August 2005. Sumco Corporation was incorporated in 1999 and is headquartered in Tokyo, Japan.