Comparing Element Solutions (NYSE:ESI) & DAQO New Energy (NYSE:DQ)

DAQO New Energy (NYSE:DQ) and Element Solutions (NYSE:ESI) are both mid-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Profitability

This table compares DAQO New Energy and Element Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DAQO New Energy	-53.74%	-5.89%	-5.42%
Element Solutions	9.58%	14.01%	7.28%

Analyst Recommendations

This is a breakdown of recent recommendations for DAQO New Energy and Element Solutions, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DAQO New Energy	1	2	3	1	2.57
Element Solutions	0	2	7	1	2.90

DAQO New Energy presently has a consensus price target of $27.04, suggesting a potential downside of 21.66%. Element Solutions has a consensus price target of $30.88, suggesting a potential upside of 23.80%. Given Element Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe Element Solutions is more favorable than DAQO New Energy.

Insider and Institutional Ownership

47.2% of DAQO New Energy shares are held by institutional investors. Comparatively, 92.3% of Element Solutions shares are held by institutional investors. 24.3% of DAQO New Energy shares are held by insiders. Comparatively, 6.9% of Element Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares DAQO New Energy and Element Solutions”s 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	$639.06 million	3.62	-$345.21 million	($5.14)	-6.71
Element Solutions	$2.50 billion	2.41	$244.20 million	$0.99	25.19

Element Solutions has higher revenue and earnings than DAQO New Energy. DAQO New Energy is trading at a lower price-to-earnings ratio than Element Solutions, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

DAQO New Energy has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Element Solutions has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Summary

Element Solutions beats DAQO New Energy on 12 of the 14 factors compared between the two stocks.

About DAQO New Energy

Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufacturers in the People's Republic of China. Its products are used in ingots, wafers, cells, and modules for solar power solutions. 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 based in Shanghai, the People's Republic of China.

About Element Solutions

Element Solutions Inc operates as a specialty chemicals company in the United States, China, and internationally. The company operates in two segments, Electronics, and Industrial & Specialty. The Electronics segment researches, formulates, and sells specialty chemicals and materials for various types of electronics hardware products. This segment also supplies surface mount technologies, fluxes, thermal management material, coatings, and other attachment materials; chemical formulations to the electronics industry; and advanced copper interconnects, die attachment, sintered silver material, adhesives, wafer bump processes, and photomask technologies for semiconductor industry. It primarily serves mobile communications, computers, automobiles, and aerospace equipment industries. The Industrial & Specialty segment provides industrial solutions, which include chemical systems that protect and decorate metal and plastic surfaces; consumable chemicals that enable printing image transfer on flexible packaging materials; and chemistries used in water-based hydraulic control fluids for offshore energy production applications. It serves aerospace, automotive, construction, consumer electronics, consumer packaged goods, and oil and gas production end markets. The company was formerly known as Platform Specialty Products Corporation and changed its name to Element Solutions Inc in January 2019. Element Solutions Inc was founded in 1785 and is headquartered in Fort Lauderdale, Florida.