Daqo New Energy Corp. Just Missed EPS By 57%: Here's What Analysts Think Will Happen Next

The analysts might have been a bit too bullish on Daqo New Energy Corp. (NYSE:DQ), given that the company fell short of expectations when it released its quarterly results last week. It looks like quite a negative result overall, with both revenues and earnings falling well short of analyst predictions. Revenues of US$415m missed by 16%, and statutory earnings per share of US$0.24 fell short of forecasts by 57%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Daqo New Energy after the latest results.

See our latest analysis for Daqo New Energy

Taking into account the latest results, Daqo New Energy's eight analysts currently expect revenues in 2024 to be US$2.00b, approximately in line with the last 12 months. Statutory earnings per share are forecast to nosedive 69% to US$0.79 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.43b and earnings per share (EPS) of US$3.73 in 2024. Indeed, we can see that the analysts are a lot more bearish about Daqo New Energy's prospects following the latest results, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the US$29.45 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Daqo New Energy, with the most bullish analyst valuing it at US$45.00 and the most bearish at US$18.70 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 1.1% annualised decline to the end of 2024. That is a notable change from historical growth of 42% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 17% annually for the foreseeable future. It's pretty clear that Daqo New Energy's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Daqo New Energy. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Daqo New Energy going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Daqo New Energy that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.