Magnachip Semiconductor (MX) & Daqo New Energy (NYSE:DQ) Critical Contrast

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

Institutional & Insider Ownership

42.6% of Daqo New Energy shares are held by institutional investors. Comparatively, 92.8% of Magnachip Semiconductor shares are held by institutional investors. 5.4% of Magnachip Semiconductor shares are held 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 Magnachip Semiconductor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Daqo New Energy 28.32% 23.80% 13.12%
Magnachip Semiconductor 4.26% -74.01% 5.50%

Valuation and Earnings

This table compares Daqo New Energy and Magnachip Semiconductor’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Daqo New Energy $352.85 million 0.79 $92.84 million $8.50 3.10
Magnachip Semiconductor $679.67 million 0.49 $84.93 million $0.76 12.75

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

Risk & Volatility

Daqo New Energy has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500. Comparatively, Magnachip Semiconductor has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Daqo New Energy and Magnachip Semiconductor, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Daqo New Energy 0 1 2 0 2.67
Magnachip Semiconductor 0 1 1 0 2.50

Daqo New Energy presently has a consensus price target of $53.00, suggesting a potential upside of 100.99%. Magnachip Semiconductor has a consensus price target of $12.50, suggesting a potential upside of 29.00%. Given Daqo New Energy’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Daqo New Energy is more favorable than Magnachip Semiconductor.

Summary

Daqo New Energy beats Magnachip Semiconductor on 10 of the 14 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.

Magnachip Semiconductor Company Profile

MagnaChip Semiconductor Corporation, together with its subsidiaries, designs, manufactures, and sells analog and mixed-signal semiconductor platform solutions for communications, Internet of Things, consumer, industrial, and automotive applications. The company operates through two segments, Foundry Services Group and Standard Products Group. The Foundry Services Group segment provides analog and mixed-signal foundry services for fabless and integrated device manufacturer semiconductor companies to manufacture a range of products, including display drivers, light emitting diode (LED) drivers, audio encoding and decoding devices, microcontrollers, touch screen controllers, RF switches, park distance control sensors for automotive, electronic tag memories, and power management semiconductors. The Standard Products Group segment offers display solutions, including source and gate drivers, and timing controllers that cover a range of flat panel displays used in ultra-high definition, high definition, full high definition, LED, 3D and organic light emitting diodes televisions and displays, notebooks, and mobile communications and entertainment devices. This segment also offers power management semiconductor products, such as metal oxide semiconductor field effect transistors, insulated gate bipolar mode transistors, converters, LED drivers, SSD PMIC products, and switching and linear regulators for televisions, smartphones, mobile phones, desktop PCs, notebooks, tablet PCs, other consumer electronics, and consumer appliances, as well as for industrial applications. It serves consumer, computing, and industrial electronics original equipment manufacturers; original design manufacturers; and electronics manufacturing services companies, as well as subsystem designers. The company sells its products through direct sales force, as well as through a network of agents and distributors worldwide. MagnaChip Semiconductor Corporation is based in Luxembourg City, Luxembourg.

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