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Daqo New Energy (DQ) to Post Q4 Earnings: What's in Store?

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Daqo New Energy Corp. DQ is set to release fourth-quarter 2019 results ahead of the bell on Mar 11. Benefits of higher production and sales volumes are likely to reflect on its results. The company is also likely to have gained from lower production costs.

The leading producer of high-purity polysilicon delivered a negative earnings surprise of 20.9% in the last reported quarter. It beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missed twice. In this timeframe, it delivered a positive surprise of around 227.3%, on an average.

The company’s shares have surged 84% over a year compared with the industry’s 1.2% fall.


 

Let’s see how things are shaping up for this announcement.

Some Factors at Play

Daqo New Energy’s fourth-quarter results are expected to reflect the benefits of higher expected production volumes. The company, in September 2019, completed the construction and installation of its new Phase 4A expansion project. Ramp up of production of the additional capacity (of 35,000 metric tons) from this expansion is likely to have boosted the company’s production volumes in the fourth quarter.

The company expects polysilicon production volumes for the fourth quarter to be roughly 14,000-15,000 metric tons assuming full production capacity from Phase 4A. This is higher than the record-high volumes of 9,437 metric tons it registered in the third quarter.

Daqo New Energy is also likely to have benefited from lower production costs in the fourth quarter, driven by the Phase 4A expansion. The company’s energy efficiency efforts and enhanced manufacturing efficiencies are also contributing to lower costs.

Moreover, benefits of higher sales volumes are likely to get reflected on the company’s fourth-quarter revenues. The company expects polysilicon sales volumes to external customers of 12,500-13,500 metric tons in the fourth quarter, higher than 9,238 metric tons it recorded in the third quarter.

The Zacks Consensus Estimate for the company’s fourth-quarter sales is currently pegged at $118.8 million, which suggests a rise of 57.1% from the year-ago quarter’s tally.

DAQO New Energy Corp. Price and EPS Surprise

 

DAQO New Energy Corp. Price and EPS Surprise

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

Zacks Model

Our proven model does not conclusively predict an earnings beat for Daqo New Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Daqo New Energy is 0.00%. The Zacks Consensus Estimate for the fourth quarter is currently pegged at 91 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: Daqo New Energy sports a Zacks Rank #1.  

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Azul S.A. (AZUL - Free Report) , slated to release earnings on Mar 12, has an Earnings ESP of +16.13% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aptose Biosciences Inc. APTO, slated to release earnings on Mar 10, has an Earnings ESP of +23.25% and carries a Zacks Rank #3.

BioLife Solutions, Inc. BLFS, slated to release earnings on Mar 11, has an Earnings ESP of +183.33% and carries a Zacks Rank #3.

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