Why Daqo New Energy Stock Is Skyrocketing Today
Key Points
Daqo reported its third-quarter results this morning, and its performance was better than what Wall Street expected.
The business posted an adjusted profit, and sales came in well above the anticipated level.
News that the U.S. and China are making progress on a trade deal is also boosting the stock.
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Daqo New Energy (NYSE: DQ) stock is surging higher in Monday's trading. The company's share price was up 11.3% as of 1:30 p.m. ET. At the same point in the day's trading, the S&P 500 (SNPINDEX: ^GSPC) was up 0.9%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) had risen 1.6%.
Daqo published its unaudited third-quarter results before the market opened this morning, and the solar technologies specialist posted sales and earnings that topped the market's expectations. The company's American depositary shares (ADRs) are also getting a boost from news that the U.S. and China have established a preliminary framework on a trade deal.
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Daqo stock pops on strong Q3 print
Daqo posted non-GAAP (generally accepted accounting principles) adjusted earnings per ADR of $0.05 in the third quarter, and revenue for the period absolutely crushed the market's forecast. The business posted sales of $244.6 million in the period, topping the average Wall Street analyst estimate by roughly $67.8 million. Sales were up roughly 23% year over year, with strong polysilicon production and sales volumes and lower cash costs helping to drive strong results.
The latest news on the U.S.-China trade front is good for Daqo
Over the weekend, Trump administration officials announced that the U.S. and China had reached a basic framework for a trade deal in advance of President Trump's meeting with Chinese President Xi Jinping. The proposed plan includes a one-year delay on China's new rare earth mineral export restrictions and a Chinese agreement to buy U.S. soybeans.
While these developments might not appear to have an immediate impact on Daqo's business, they do help support a stronger valuation case for the company. In particular, improvements in relations between the U.S. and China should help to minimize the risk that Daqo's ADRs could be delisted from the New York Stock Exchange.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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