DAQO New Energy Corp. (NYSE: DQ) and SolarCity Corp (NASDAQ:SCTY) are both basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitabiliy, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares DAQO New Energy Corp. and SolarCity Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DAQO New Energy Corp. 22.75% 22.97% 9.54%
SolarCity Corp -112.36% 22.92% -10.69%

Valuation & Earnings

This table compares DAQO New Energy Corp. and SolarCity Corp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DAQO New Energy Corp. $255.23 million 0.82 $121.90 million $5.45 3.63
SolarCity Corp N/A N/A N/A ($0.29) -70.14

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

Analyst Recommendations

This is a summary of current ratings and price targets for DAQO New Energy Corp. and SolarCity Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DAQO New Energy Corp. 0 0 2 0 3.00
SolarCity Corp 2 14 1 0 1.94

DAQO New Energy Corp. presently has a consensus price target of $37.50, indicating a potential upside of 89.39%. SolarCity Corp has a consensus price target of $28.30, indicating a potential upside of 39.12%. Given DAQO New Energy Corp.’s stronger consensus rating and higher possible upside, analysts clearly believe DAQO New Energy Corp. is more favorable than SolarCity Corp.

Volatility & Risk

DAQO New Energy Corp. has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500. Comparatively, SolarCity Corp has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500.

Institutional and Insider Ownership

30.0% of DAQO New Energy Corp. shares are owned by institutional investors. Comparatively, 40.0% of SolarCity Corp shares are owned by institutional investors. 36.4% of SolarCity Corp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

DAQO New Energy Corp. beats SolarCity Corp on 8 of the 11 factors compared between the two stocks.

DAQO New Energy Corp. Company Profile

Daqo New Energy Corp. is a polysilicon manufacturer. The Company utilizes the chemical vapor deposition process, or the modified Siemens process, to produce polysilicon. The Company’s segments include Polysilicon and Wafer. The Company manufactures and sells polysilicon to photovoltaic product manufacturers, whereby the polysilicon is processed into ingots, wafers, cells and modules for solar power solutions. The Company offers ready-to-use polysilicon, packaged to meet crucible stacking, pulling and solidification needs. The Company offers wafers through its downstream photovoltaic product manufacturing business. The Company also provides wafer original equipment manufacturer (OEM) service to external customers through tolling agreements by processing polysilicon to produce ingot and wafer. Its annual capacity for polysilicon is approximately 12,150 metric tons (MT) in Xinjiang. The Company’s wafer manufacturing annual capacity is approximately 90 million pieces.

SolarCity Corp Company Profile

SolarCity Corporation is a United States-based solar provider. The Company is primarily engaged in the design, manufacture, installation and sale or lease of solar energy systems to residential and commercial customers, or sale of electricity generated by solar energy systems to customers. It operates through solar energy products and services segment. It integrates the sales, engineering, manufacturing, installation, monitoring, maintenance and financing of its distributed solar energy systems. It offers its customers the option to either purchase and own solar energy systems or to purchase the energy that its solar energy systems produce through various contractual arrangements. It installs solar energy system at its customer’s premises and charge the customer a monthly fee for the power that its system produces. Its products, services and technologies include solar energy systems, customer agreements, grid control/energy storage systems, Zep Solar mounting systems and software.

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