DAQO New Energy Corp. (NYSE: DQ) and SunPower Corporation (NASDAQ:SPWR) are both small-cap basic materials companies, but which is the better business? We will compare the two companies based on the strength of their profitabiliy, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Profitability

This table compares DAQO New Energy Corp. and SunPower Corporation’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%
SunPower Corporation -21.84% -12.56% -2.88%

Insider & Institutional Ownership

30.3% of DAQO New Energy Corp. shares are owned by institutional investors. Comparatively, 25.6% of SunPower Corporation shares are owned by institutional investors. 0.9% of SunPower Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares DAQO New Energy Corp. and SunPower Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DAQO New Energy Corp. $255.23 million 1.14 $121.90 million $5.45 5.06
SunPower Corporation $2.49 billion 0.52 -$74.76 million ($3.92) -2.36

DAQO New Energy Corp. has higher revenue, but lower earnings than SunPower Corporation. SunPower Corporation 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.

Risk and Volatility

DAQO New Energy Corp. has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500. Comparatively, SunPower Corporation has a beta of 3.11, suggesting that its stock price is 211% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for DAQO New Energy Corp. and SunPower Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DAQO New Energy Corp. 0 0 2 0 3.00
SunPower Corporation 1 14 3 0 2.11

DAQO New Energy Corp. currently has a consensus target price of $37.50, suggesting a potential upside of 35.87%. SunPower Corporation has a consensus target price of $9.52, suggesting a potential upside of 2.87%. Given DAQO New Energy Corp.’s stronger consensus rating and higher probable upside, equities analysts plainly believe DAQO New Energy Corp. is more favorable than SunPower Corporation.

Summary

DAQO New Energy Corp. beats SunPower Corporation on 9 of the 13 factors compared between the two stocks.

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.

About SunPower Corporation

SunPower Corporation is a global energy company. The Company delivers complete solar solutions to residential, commercial, and power plant customers. The Company’s segments include Residential Segment, Commercial Segment and Power Plant Segment. The Residential and Commercial Segments combined are referred to as Distributed Generation. The Company offers solar module technology and solar power systems that are designed to generate electricity over a system life over 25 years; Integrated Smart Energy software solutions that enable customers to manage and optimize the cooperation center of excellence (CCOE) measurement; Installation, construction, and ongoing maintenance and monitoring services; and financing solutions that provide customers a range of options for purchasing or leasing solar products at competitive energy rates. The Company offers a set of residential solutions that deliver value to homeowners and its dealer partners.

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