Daqo New Energy (NYSE: DQ) and Sunrun (NASDAQ:RUN) are both small-cap energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.
Insider and Institutional Ownership
27.4% of Daqo New Energy shares are owned by institutional investors. Comparatively, 78.1% of Sunrun shares are owned by institutional investors. 24.1% of Sunrun shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares Daqo New Energy and Sunrun’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Daqo New Energy||$229.10 million||2.16||$43.49 million||$5.87||8.01|
|Sunrun||$453.90 million||1.29||$91.68 million||$0.87||6.31|
Sunrun has higher revenue and earnings than Daqo New Energy. Sunrun 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 table compares Daqo New Energy and Sunrun’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Daqo New Energy||21.42%||21.51%||9.72%|
This is a breakdown of recent ratings and price targets for Daqo New Energy and Sunrun, as reported 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 $52.50, indicating a potential upside of 11.61%. Sunrun has a consensus target price of $9.00, indicating a potential upside of 63.93%. Given Sunrun’s higher possible upside, analysts clearly believe Sunrun is more favorable than Daqo New Energy.
Volatility and Risk
Daqo New Energy has a beta of 2.05, indicating that its stock price is 105% more volatile than the S&P 500. Comparatively, Sunrun has a beta of -0.69, indicating that its stock price is 169% less volatile than the S&P 500.
Daqo New Energy beats Sunrun on 7 of the 13 factors compared between the two stocks.
About Daqo New Energy
Daqo New Energy Corp. is a polysilicon manufacturer. The Company utilizes the chemical vapor deposition process, or the modified Siemens process, to produce polysilicon. The Company’s segments include Polysilicon and Wafer. The Company manufactures and sells polysilicon to photovoltaic product manufacturers, whereby the polysilicon is processed into ingots, wafers, cells and modules for solar power solutions. The Company offers ready-to-use polysilicon, packaged to meet crucible stacking, pulling and solidification needs. The Company offers wafers through its downstream photovoltaic product manufacturing business. The Company also provides wafer original equipment manufacturer (OEM) service to external customers through tolling agreements by processing polysilicon to produce ingot and wafer. Its annual capacity for polysilicon is approximately 12,150 metric tons (MT) in Xinjiang. The Company’s wafer manufacturing annual capacity is approximately 90 million pieces.
Sunrun Inc. is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy systems (Projects) in the United States. The Company is engaged in providing solar energy services and products to its customers. As of December 31, 2016, it operated a fleet of residential solar energy systems in the United States, with approximately 134,000 customers across 16 states, as well as the District of Columbia. The Company sells to homeowners over the phone, in the field through canvassing and in-home sales and through retail sales channels through its strategic partners. The solar service offerings are provided through its lease and power purchase agreements. It sells solar service offerings and installs solar energy systems for homeowners through its direct-to-consumer channel. It sells solar energy systems to homeowners, as well as related products, such as solar panels, inverters, racking systems and other solar-related equipment to resellers.
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