Critical Contrast: Daqo New Energy (NYSE:DQ) and United Microelectronics (NYSE:UMC)

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

Insider and Institutional Ownership

39.9% of Daqo New Energy shares are owned by institutional investors. Comparatively, 5.3% of United Microelectronics shares are owned by institutional investors. 8.0% of United Microelectronics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Daqo New Energy 6.79% 5.68% 3.20%
United Microelectronics 2.90% 2.00% 1.11%

Valuation and Earnings

This table compares Daqo New Energy and United Microelectronics’ 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 $301.60 million 1.93 $38.13 million $4.44 12.08
United Microelectronics $4.92 billion 1.25 $250.82 million N/A N/A

United Microelectronics has higher revenue and earnings than Daqo New Energy.

Risk & Volatility

Daqo New Energy has a beta of 1.74, suggesting that its stock price is 74% more volatile than the S&P 500. Comparatively, United Microelectronics has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Daqo New Energy and United Microelectronics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Daqo New Energy 0 0 2 0 3.00
United Microelectronics 0 5 3 0 2.38

Daqo New Energy currently has a consensus price target of $50.00, suggesting a potential downside of 6.77%. Given Daqo New Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Daqo New Energy is more favorable than United Microelectronics.

Summary

Daqo New Energy beats United Microelectronics on 8 of the 13 factors compared between the two stocks.

Daqo New Energy Company Profile

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.

United Microelectronics Company Profile

United Microelectronics Corporation provides semiconductor wafer foundry solutions. The company operates through Wafer Fabrication and New Business segments. It provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. The company also engages in the research, development, and manufacture of products in the solar energy and light-emitting diode industries. It serves fabless design companies, and integrated device manufacturers. The company operates primarily in Taiwan, Singapore, China, Japan, Europe, and the United States. United Microelectronics Corporation was founded in 1980 and is headquartered in Hsinchu City, Taiwan.

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