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    Daqo New Energy Corp. (NYSE:DQ) Not Doing Enough For Some Investors As Its Shares Slump 26%

    Simply Wall St·04/11/2025 10:33:07
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    The Daqo New Energy Corp. (NYSE:DQ) share price has fared very poorly over the last month, falling by a substantial 26%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 45% share price drop.

    Following the heavy fall in price, Daqo New Energy may be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.9x, since almost half of all companies in the Semiconductor industry in the United States have P/S ratios greater than 2.9x and even P/S higher than 7x are not unusual. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

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    See our latest analysis for Daqo New Energy

    ps-multiple-vs-industry
    NYSE:DQ Price to Sales Ratio vs Industry April 11th 2025

    How Daqo New Energy Has Been Performing

    Daqo New Energy hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. Perhaps the P/S remains low as investors think the prospects of strong revenue growth aren't on the horizon. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

    If you'd like to see what analysts are forecasting going forward, you should check out our free report on Daqo New Energy .

    Do Revenue Forecasts Match The Low P/S Ratio?

    In order to justify its P/S ratio, Daqo New Energy would need to produce sluggish growth that's trailing the industry.

    In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 55%. This means it has also seen a slide in revenue over the longer-term as revenue is down 39% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

    Looking ahead now, revenue is anticipated to climb by 21% per year during the coming three years according to the nine analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 24% per annum, which is noticeably more attractive.

    With this information, we can see why Daqo New Energy is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

    The Final Word

    Daqo New Energy's P/S has taken a dip along with its share price. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

    We've established that Daqo New Energy maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

    A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for Daqo New Energy with six simple checks on some of these key factors.

    If you're unsure about the strength of Daqo New Energy's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.