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DQ vs. KWR: Which Stock Is the Better Value Option?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Investors interested in Chemical - Specialty stocks are likely familiar with Daqo New Energy (DQ) and Quaker Chemical (KWR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Daqo New Energy has a Zacks Rank of #1 (Strong Buy), while Quaker Chemical has a Zacks Rank of #3 (Hold) right now. This means that DQ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

DQ currently has a forward P/E ratio of 6.15, while KWR has a forward P/E of 32.54. We also note that DQ has a PEG ratio of 0.21. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KWR currently has a PEG ratio of 2.96.

Another notable valuation metric for DQ is its P/B ratio of 0.51. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, KWR has a P/B of 5.99.

Based on these metrics and many more, DQ holds a Value grade of A, while KWR has a Value grade of D.

DQ is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DQ is likely the superior value option right now.


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DAQO New Energy Corp. (DQ) : Free Stock Analysis Report
 
Quaker Chemical Corporation (KWR) : Free Stock Analysis Report
 
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