Analyzing Daqo New Energy (NYSE:DQ) & Sumco (OTCMKTS:SUOPY)

Daqo New Energy (NYSE:DQ) and Sumco (OTCMKTS:SUOPY) are both basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, institutional ownership, earnings, profitability, dividends, valuation and analyst recommendations.

Profitability

This table compares Daqo New Energy and Sumco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Daqo New Energy	-9.16%	-1.90%	-1.68%
Sumco	5.25%	3.25%	1.83%

Insider and Institutional Ownership

47.2% of Daqo New Energy shares are owned by institutional investors. Comparatively, 0.0% of Sumco shares are owned by institutional investors. 24.3% of Daqo New Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Daqo New Energy has a beta of 0.26, suggesting that its share price is 74% less volatile than the S&P 500. Comparatively, Sumco has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.

Valuation & Earnings

This table compares Daqo New Energy and Sumco”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Daqo New Energy	$2.31 billion	0.52	$429.55 million	($1.85)	-9.87
Sumco	$3.04 billion	0.87	$453.58 million	$0.80	18.83

Sumco has higher revenue and earnings than Daqo New Energy. Daqo New Energy is trading at a lower price-to-earnings ratio than Sumco, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Daqo New Energy and Sumco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Daqo New Energy	0	1	4	3	3.25
Sumco	0	0	0	0	0.00

Daqo New Energy presently has a consensus target price of $22.26, suggesting a potential upside of 21.95%. Given Daqo New Energy’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Daqo New Energy is more favorable than Sumco.

Summary

Sumco beats Daqo New Energy on 9 of the 15 factors compared between the two stocks.

About Daqo New Energy

Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufacturers in the People's Republic of China. Its products are used in ingots, wafers, cells, and modules for solar power solutions. 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 based in Shanghai, the People's Republic of China.

About Sumco

Sumco Corporation manufactures and sells silicon wafers for the semiconductor industry in Japan, the United States, China, Taiwan, Korea, and internationally. It provides monocrystalline ingots, as well as polished, annealed, epitaxial, junction isolated, silicon-on-insulator, and reclaimed polished wafers. The company was formerly known as Sumitomo Mitsubishi Silicon Corp. and changed its name to Sumco Corporation in August 2005. Sumco Corporation was incorporated in 1999 and is headquartered in Tokyo, Japan.