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DQ vs. KWR: Which Stock Should Value Investors Buy Now?

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Investors interested in Chemical - Specialty stocks are likely familiar with Daqo New Energy (DQ - Free Report) and Quaker Chemical (KWR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Daqo New Energy has a Zacks Rank of #1 (Strong Buy), while Quaker Chemical has a Zacks Rank of #3 (Hold) right now. This means that DQ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DQ currently has a forward P/E ratio of 7.10, while KWR has a forward P/E of 24.83. We also note that DQ has a PEG ratio of 0.24. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KWR currently has a PEG ratio of 1.81.

Another notable valuation metric for DQ is its P/B ratio of 1.18. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, KWR has a P/B of 2.57.

These are just a few of the metrics contributing to DQ's Value grade of A and KWR's Value grade of D.

DQ stands above KWR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DQ is the superior value option right now.


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