Daqo New Energy (DQ) To Post Q4 Earnings: What's In Store?
Zacks Investment Research | Mar 05, 2020 08:48PM ET
Daqo New Energy Corp. (NYSE: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.
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