Buying shares in the best businesses can build meaningful wealth for you and your family. And we’ve seen some truly amazing gains over the years. Just think about the savvy investors who held Daqo New Energy Corp. (NYSE:DQ) shares for the last five years, while they gained 642%. This just goes to show the value creation that some businesses can achieve. Also pleasing for shareholders was the 90% gain in the last three months.
We love happy stories like this one. The company should be really proud of that performance!
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Over half a decade, Daqo New Energy managed to grow its earnings per share at 34% a year. This EPS growth is slower than the share price growth of 49% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That’s not necessarily surprising considering the five-year track record of earnings growth.
The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Daqo New Energy has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.
A Different Perspective
It’s nice to see that Daqo New Energy shareholders have received a total shareholder return of 125% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 49% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It’s always interesting to track share price performance over the longer term. But to understand Daqo New Energy better, we need to consider many other factors. For example, we’ve discovered 4 warning signs for Daqo New Energy (1 shouldn’t be ignored!) that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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