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Daqo New Energy (DQ) to Post Q4 Earnings: What's in the Cards?

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Daqo New Energy Corp. DQ is slated to release fourth-quarter 2020 results before the bell on Mar 9. Benefits of higher production and sales volumes are likely to reflect on its results. The company is also likely to have gained from higher prices and its efforts to lower costs.

The leading producer of high-purity polysilicon beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missed once. In this timeframe, it delivered an earnings surprise of 179.1%, on average. It delivered a negative earnings surprise of 15.6% in the last reported quarter.

The company’s shares have surged 91.6% year to date compared with the industry’s 8.6% rise.


Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

The Zacks Consensus Estimate for the company’s fourth-quarter sales is currently pegged at $254.1 million, which suggests a rise of 113.7% from the year-ago quarter’s tally.

Some Factors at Play

Daqo New Energy’s fourth-quarter results are expected to reflect the benefits of higher production and sales volumes. The company, in its third-quarter call, noted that it sees higher production volumes in the December quarter as its facilities are now running with increased efficiency. Daqo New Energy, earlier this year, said that it expects polysilicon production volume for the fourth quarter to be 20,500-21,000 metric tons (MT). The figure is higher than 16,204 MT it registered in the fourth quarter of 2019 and above 18,406 MT in the sequentially prior quarter.

The company also expects polysilicon sales volumes of 23,000-23,200 MT for the fourth quarter. The projected figure is higher than 13,643 MT recorded in third-quarter 2020 and 13,291 MT in the year-ago quarter.

Daqo New Energy is also likely to have benefited from higher average selling prices and its actions to improve its cost structure in the to-be-reported quarter. The company’s energy efficiency efforts and enhanced manufacturing efficiencies are contributing to lower costs. Its cash cost was $4.88 per kg in the third quarter, essentially flat compared with the historically-lower cash cost of $4.87 achieved in second-quarter 2020. The company, in November, said that it expects potential cost reduction by around 3% sequentially in the fourth quarter. It also expects polysilicon average selling price to rise meaningfully in the fourth quarter vis-à-vis the third quarter on the back of strong market demand for mono-grade polysilicon.

DAQO New Energy Corp. Price and EPS Surprise

DAQO New Energy Corp. Price and EPS Surprise
DAQO New Energy Corp. Price and EPS Surprise

DAQO New Energy Corp. price-eps-surprise | DAQO New Energy Corp. Quote

Zacks Model

Our proven model does not conclusively predict an earnings beat for Daqo New Energy this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Daqo New Energy is 0.00%. The Zacks Consensus Estimate for earnings for the fourth quarter is currently pegged at $1.15. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Daqo New Energy currently carries a Zacks Rank #1.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Sierra Metals Inc. SMTS, scheduled to release earnings on Mar 18, has an Earnings ESP of +12.50% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada Corporation FNV, scheduled to release earnings on Mar 10, has an Earnings ESP of +1.79% and carries a Zacks Rank #3.

The ExOne Company XONE, scheduled to release earnings on Mar 11, has an Earnings ESP of +27.59% and carries a Zacks Rank #3.

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