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Is Daqo New Energy (DQ) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Daqo New Energy (DQ) is a stock many investors are watching right now. DQ is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.27, which compares to its industry's average of 18.15. DQ's Forward P/E has been as high as 10.74 and as low as 4.11, with a median of 6.53, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DQ has a P/S ratio of 0.97. This compares to its industry's average P/S of 1.36.

Finally, our model also underscores that DQ has a P/CF ratio of 5.17. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DQ's P/CF compares to its industry's average P/CF of 19.61. DQ's P/CF has been as high as 5.93 and as low as 2.40, with a median of 3.76, all within the past year.

These are just a handful of the figures considered in Daqo New Energy's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DQ is an impressive value stock right now.


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