Critical Review: Nova (NASDAQ:NVMI) and DAQO New Energy (NYSE:DQ)

DAQO New Energy (NYSE:DQ) and Nova (NASDAQ:NVMI) are both technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, risk and valuation.

Institutional and Insider Ownership

47.2% of DAQO New Energy shares are owned by institutional investors. Comparatively, 83.0% of Nova shares are owned by institutional investors. 24.3% of DAQO New Energy shares are owned by insiders. Comparatively, 1.0% of Nova shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

DAQO New Energy has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500. Comparatively, Nova has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DAQO New Energy	-34.50%	-3.26%	-3.01%
Nova	28.84%	21.41%	11.95%

Analyst Ratings

This is a summary of recent recommendations for DAQO New Energy and Nova, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DAQO New Energy	4	1	1	0	1.50
Nova	0	2	8	1	2.91

DAQO New Energy currently has a consensus price target of $15.83, indicating a potential upside of 32.91%. Nova has a consensus price target of $514.44, indicating a potential upside of 47.80%. Given Nova’s stronger consensus rating and higher possible upside, analysts clearly believe Nova is more favorable than DAQO New Energy.

Valuation and Earnings

This table compares DAQO New Energy and Nova”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	$665.41 million	1.21	-$170.51 million	($2.84)	-4.19
Nova	$880.58 million	12.56	$259.22 million	$8.08	43.08

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

Summary

Nova beats DAQO New Energy on 14 of the 15 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 Nova

Nova Ltd. designs, develops, produces, and sells process control systems used in the manufacture of semiconductors in Israel, Taiwan, the United States, China, Korea, and internationally. Its product portfolio includes a set of metrology platforms for dimensional, films, and materials and chemical metrology measurements for process control for various semiconductor manufacturing process steps, including lithography, etch, chemical mechanical planarization, deposition, electrochemical plating, and advanced packaging. The company serves various sectors of the integrated circuit manufacturing industry, including logic, foundries, and memory manufacturers, as well as process equipment manufacturers. Nova Ltd. was formerly known as Nova Measuring Instruments Ltd. and changed its name to Nova Ltd. in July 2021. Nova Ltd. was incorporated in 1993 and is headquartered in Rehovot, Israel.