Daqo New Energy Corp. (NYSE:DQ) shares have retraced a considerable 26% in the last month, reversing a fair amount of their solid recent performance. Looking at the bigger picture, even after this poor month the stock is up 33% in the last year.
Following the heavy fall in price, Daqo New Energy’s price-to-sales (or “P/S”) ratio of 2.7x might make it look like a buy right now compared to the Semiconductor industry in the United States, where around half of the companies have P/S ratios above 5.2x and even P/S above 14x are quite common. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
View our latest analysis for Daqo New Energy
NYSE:DQ Price to Sales Ratio vs Industry January 10th 2026 What Does Daqo New Energy’s P/S Mean For Shareholders?
Daqo New Energy could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. 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.
Keen to find out how analysts think Daqo New Energy’s future stacks up against the industry? In that case, our free report is a great place to start. Do Revenue Forecasts Match The Low P/S Ratio?
There’s an inherent assumption that a company should underperform the industry for P/S ratios like Daqo New Energy’s to be considered reasonable.
Taking a look back first, the company’s revenue growth last year wasn’t something to get excited about as it posted a disappointing decline of 51%. As a result, revenue from three years ago have also fallen 85% overall. Therefore, it’s fair to say the revenue growth recently has been undesirable for the company.
Turning to the outlook, the next year should generate growth of 50% as estimated by the nine analysts watching the company. That’s shaping up to be materially higher than the 45% growth forecast for the broader industry.
In light of this, it’s peculiar that Daqo New Energy’s P/S sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.
The Key Takeaway
The southerly movements of Daqo New Energy’s shares means its P/S is now sitting at a pretty low level. Using the price-to-sales ratio alone to determine if you should sell your stock isn’t sensible, however it can be a practical guide to the company’s future prospects.
To us, it seems Daqo New Energy currently trades on a significantly depressed P/S given its forecasted revenue growth is higher than the rest of its industry. There could be some major risk factors that are placing downward pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.
The company’s balance sheet is another key area for risk analysis. Take a look at our free balance sheet analysis for Daqo New Energy with six simple checks on some of these key factors.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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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.