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Daqo New Energy (DQ) Q4 Earnings and Sales Lag Estimates

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Daqo New Energy Corp. (DQ - Free Report) logged earnings of $1.94 per share for fourth-quarter 2021, up from 96 cents in the year-ago quarter. Earnings for the reported quarter lagged the Zacks Consensus Estimate of $2.34.

This leading producer of high-purity polysilicon registered revenues of $395.5 million for the quarter, up around 60% year over year. It, however, missed the Zacks Consensus Estimate of $510.3 million.

Sales were driven by higher year over year average selling price (“ASP”), which offset lower sales volumes. The company also faced significant headwinds from a spike in raw material costs during the fourth quarter.

DAQO New Energy Corp. Price, Consensus and EPS Surprise

 

DAQO New Energy Corp. Price, Consensus and EPS Surprise

DAQO New Energy Corp. price-consensus-eps-surprise-chart | DAQO New Energy Corp. Quote

Volumes, Prices and Costs

Polysilicon production volume for the fourth quarter was 23,616 metric tons, up around 12% year over year. Sales volume was 11,642 metric tons for the quarter, down roughly 50% year over year. The company witnessed a temporary reduction in demand due to the year-end seasonality impact and downstream inventory adjustments.

Polysilicon ASP was $33.91 per kg for the reported quarter, up from $10.79 per kg in the year-ago quarter.

Average total production cost was $14.11 per kg for the quarter, up from $5.92 per kg a year ago. The increase is partly attributable to higher silicon powder costs. Average cash cost was $13.32 per kg, up from $5.04 per kg a year ago.

FY21 Results

Earnings for full-year 2021 were $9.85 per share compared with $1.72 per share a year ago. Revenues were $1,678.8 million for the full year, up around 148% year over year.  The top line was driven by higher polysilicon ASP and increased sales volumes.

Financials

The company ended 2021 with cash, cash equivalents and restricted cash of roughly $724 million, up more than sixfold year over year. Total borrowings were nil at the end of the year.

Net cash provided by operating activities was $639.1 million for 2021, compared with $209.7 million a year ago.

Outlook

Daqo New Energy expects to produce around 31,000-32,000 metric tons of polysilicon during the first quarter of 2022. It also expects to produce roughly 120,000-125,000 metric tons of polysilicon for full-year 2022. The projection includes the impact of the company's annual facility maintenance. The company also expects production cost to decline meaningfully in the first quarter of 2022 due to reduced silicon powder prices and improved operational efficiency in its newly-built Phase 4B facility.

Price Performance

Shares of Daqo New Energy are down 40.8% in a year compared with the industry’s decline of 15.3%.

 

Zacks Investment Research
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Zacks Rank & Other Key Picks

Daqo New Energy currently carries a Zacks Rank #2 (Buy)

Some other top-ranked stocks worth considering in the basic materials space include Cabot Corporation (CBT - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .

Cabot, carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 15.5% for the current fiscal year. The Zacks Consensus Estimate for CBT for the current fiscal year has been revised 7.8% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 21.6%. CBT shares have popped around 50% in a year.

AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 17.3% for the current year. ASIX's consensus estimate for current-year earnings has been revised 12.4% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 52% in a year.

Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 32% in a year.

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