Canadian Solar (NASDAQ: CSIQ) and DAQO New Energy Corp. (NYSE:DQ) are both small-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitabiliy, valuation, institutional ownership and risk.

Risk and Volatility

Canadian Solar has a beta of 3.08, suggesting that its share price is 208% more volatile than the S&P 500. Comparatively, DAQO New Energy Corp. has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Canadian Solar and DAQO New Energy Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Solar 2 6 3 0 2.09
DAQO New Energy Corp. 0 0 2 0 3.00

Canadian Solar presently has a consensus target price of $16.58, indicating a potential upside of 7.24%. DAQO New Energy Corp. has a consensus target price of $37.50, indicating a potential upside of 87.50%. Given DAQO New Energy Corp.’s stronger consensus rating and higher possible upside, analysts plainly believe DAQO New Energy Corp. is more favorable than Canadian Solar.

Earnings and Valuation

This table compares Canadian Solar and DAQO New Energy Corp.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Canadian Solar $2.81 billion 0.32 $112.21 million $0.49 31.55
DAQO New Energy Corp. $255.23 million 0.82 $121.90 million $5.45 3.67

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

Institutional and Insider Ownership

37.0% of Canadian Solar shares are held by institutional investors. Comparatively, 30.0% of DAQO New Energy Corp. shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Canadian Solar 1.04% 7.12% 1.24%
DAQO New Energy Corp. 22.75% 22.97% 9.54%

Summary

DAQO New Energy Corp. beats Canadian Solar on 8 of the 13 factors compared between the two stocks.

About Canadian Solar

Canadian Solar Inc. is a solar power company. The Company is a provider of solar power products, services and system solutions with operations in North America, South America, Europe, Africa, the Middle East, Australia and Asia. Its segments include module segment, energy development segment and electricity generation segment. It designs, develops and manufactures solar wafers, solar cells and solar power products. The module segment primarily involves the design, development, manufacturing and sale of a range of solar power products, including standard solar modules and specialty solar products, and solar system kits. Its energy development segment consists of solar power project development, engineering, procurement and construction services, and operation and maintenance services. Its electricity generation segment consists of holding solar power projects for the purpose of generating income from the sale of electricity to the local or national grid or other power purchasers.

About DAQO New Energy Corp.

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.

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