Analyzing Daqo New Energy (NYSE:DQ) and Pixelworks (NYSE:PXLW)

Daqo New Energy (NYSE:DQ) and Pixelworks (NASDAQ:PXLW) are both small-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, profitability, earnings, analyst recommendations and dividends.

Insider & Institutional Ownership

32.7% of Daqo New Energy shares are held by institutional investors. Comparatively, 36.7% of Pixelworks shares are held by institutional investors. 4.6% of Pixelworks shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Daqo New Energy and Pixelworks’ 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 1.49 $38.13 million $4.44 9.31
Pixelworks $76.55 million 1.68 -$4.62 million ($0.07) -48.57

Daqo New Energy has higher revenue and earnings than Pixelworks. Pixelworks 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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Daqo New Energy and Pixelworks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Daqo New Energy 0 0 1 0 3.00
Pixelworks 0 0 2 0 3.00

Daqo New Energy presently has a consensus price target of $58.00, suggesting a potential upside of 40.30%. Pixelworks has a consensus price target of $7.00, suggesting a potential upside of 105.88%. Given Pixelworks’ higher probable upside, analysts plainly believe Pixelworks is more favorable than Daqo New Energy.

Profitability

This table compares Daqo New Energy and Pixelworks’ 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%
Pixelworks -5.07% -9.52% -6.49%

Risk and Volatility

Daqo New Energy has a beta of 1.83, suggesting that its share price is 83% more volatile than the S&P 500. Comparatively, Pixelworks has a beta of 1.96, suggesting that its share price is 96% more volatile than the S&P 500.

Summary

Daqo New Energy beats Pixelworks on 7 of the 13 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.

About Pixelworks

Pixelworks, Inc. designs, develops, and markets video processing semiconductors, intellectual property cores, software, and custom application specific integrated circuits (ICs) solutions for video applications. Its products enable customers to deliver the energy efficient video quality on their devices. The company provides video display processor products, including image processor ICs, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; and video co-processor ICs that work with an image processor to post-process video signals to enhance the performance or feature set of the overall video solution, as well as transcoder ICs, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing for converting bitrates, resolutions, and codecs. As of December 31, 2017, it had an intellectual property portfolio of 536 patents related to the visual display of digital image data. The company's products are used in digital projection systems, tablets, and smartphones, as well as over-the-air streaming devices. Pixelworks, Inc. sells its products through a direct sales force, as well as distributors and manufacturers' representatives worldwide. The company was founded in 1997 and is based in San Jose, California.

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