Critical Analysis: Daqo New Energy (NYSE:DQ) and NeoPhotonics (NYSE:NPTN)
Daqo New Energy (NYSE:DQ) and NeoPhotonics (NYSE:NPTN) are both small-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.
Volatility and Risk
Daqo New Energy has a beta of 1.83, indicating that its stock price is 83% more volatile than the S&P 500. Comparatively, NeoPhotonics has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500.
32.7% of Daqo New Energy shares are held by institutional investors. Comparatively, 77.1% of NeoPhotonics shares are held by institutional investors. 16.0% of NeoPhotonics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Daqo New Energy and NeoPhotonics’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Daqo New Energy||$301.60 million||1.57||$38.13 million||$4.44||9.84|
|NeoPhotonics||$322.54 million||0.85||-$43.64 million||($0.74)||-7.77|
Daqo New Energy has higher earnings, but lower revenue than NeoPhotonics. NeoPhotonics is trading at a lower price-to-earnings ratio than Daqo New Energy, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and target prices for Daqo New Energy and NeoPhotonics, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Daqo New Energy||0||0||2||0||3.00|
Daqo New Energy currently has a consensus target price of $58.00, indicating a potential upside of 32.72%. NeoPhotonics has a consensus target price of $7.92, indicating a potential upside of 37.68%. Given NeoPhotonics’ higher possible upside, analysts clearly believe NeoPhotonics is more favorable than Daqo New Energy.
This table compares Daqo New Energy and NeoPhotonics’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Daqo New Energy||4.51%||8.59%||5.27%|
Daqo New Energy beats NeoPhotonics on 9 of the 14 factors compared between the two stocks.
About Daqo New Energy
Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon and wafers in the People's Republic of China. It operates through two segments, Polysilicon and Wafers. The company offers polysilicon to photovoltaic product manufacturers who further process its polysilicon into ingots, wafers, cells, and modules for solar power solutions. It also provides multi-crystalline wafers. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is headquartered in Wanzhou, the People's Republic of China.
NeoPhotonics Corporation develops, manufactures, and sells optoelectronic products that transmit, receive, and switch high speed digital optical signals for communications networks. It offers high speed products, including transmitter, receiver, and switching products for 100G (gigabits per second) and optical transmission applications over distances of 2 to 2,000 kilometers; optical components for coherent systems, including narrow linewidth tunable transmit and local oscillator lasers (NLW-ITLA) that generate ultra-pure wavelength or color for coherent transmission, as well as coherent micro-modulators, which encode the information on the intensity and phase of the optical beam; and integrated coherent receivers (ICRs) that decode the phase and polarization encoded coherent signals. The company also engages in developing pluggable coherent modules that combine NLW-ITLA with ICR and a coherent modulator; and offers 100G products for the client side and datacenter applications. In addition, it offers network products and solutions, including application-specific passive optical functionalities in modules or sub-system configurations; transceiver modules for various low speed access and mobile backhaul applications; and products for test and measurement, instrumentation, industrial, and research applications. The company sells its products to network equipment manufacturers through a direct sales force in North America, Europe, and Asia. The company was formerly known as NanoGram Corporation and changed its name to NeoPhotonics Corporation in 2002. NeoPhotonics Corporation was founded in 1996 and is headquartered in San Jose, California.
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