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Brief Commentary On Daqo New Energy Corp.’s (NYSE:DQ) Fundamentals

Simply Wall St

Attractive stocks have exceptional fundamentals. In the case of Daqo New Energy Corp. (NYSE:DQ), there’s is a financially-sound company with an impressive history and a buoyant growth outlook. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Daqo New Energy here.

Flawless balance sheet with solid track record

One reason why investors are attracted to DQ is its notable earnings growth potential in the near future of 26%. The optimistic bottom-line growth is supported by an outstanding revenue growth of 52% over the same time period, which indicates that earnings is driven by top-line activity rather than purely unsustainable cost-reduction initiatives. In the past couple of years, DQ has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did DQ outperformed its past performance, its growth also exceeded the Semiconductor industry expansion, which generated a 37% earnings growth. This paints a buoyant picture for the company.

NYSE:DQ Past and Future Earnings, March 1st 2019

DQ is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that DQ manages its cash and cost levels well, which is an important determinant of the company’s health. DQ appears to have made good use of debt, producing operating cash levels of 0.65x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

NYSE:DQ Historical Debt, March 1st 2019

Next Steps:

For Daqo New Energy, I’ve put together three pertinent factors you should further examine:

  1. Valuation: What is DQ worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DQ is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does DQ return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from DQ as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of DQ? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.