Ecolab (NYSE:ECL) versus DAQO New Energy (NYSE:DQ) Critical Comparison

DAQO New Energy (NYSE:DQ) and Ecolab (NYSE:ECL) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Analyst Recommendations

This is a summary of recent recommendations for DAQO New Energy and Ecolab, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DAQO New Energy	2	2	1	1	2.17
Ecolab	0	7	13	1	2.71

DAQO New Energy currently has a consensus price target of $25.43, indicating a potential upside of 20.82%. Ecolab has a consensus price target of $322.24, indicating a potential upside of 24.66%. Given Ecolab’s stronger consensus rating and higher possible upside, analysts plainly believe Ecolab is more favorable than DAQO New Energy.

Volatility and Risk

DAQO New Energy has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Ecolab has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Earnings and Valuation

This table compares DAQO New Energy and Ecolab”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DAQO New Energy	$665.41 million	2.12	-$170.51 million	($2.54)	-8.29
Ecolab	$16.08 billion	4.53	$2.08 billion	$7.28	35.51

Ecolab has higher revenue and earnings than DAQO New Energy. DAQO New Energy is trading at a lower price-to-earnings ratio than Ecolab, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares DAQO New Energy and Ecolab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DAQO New Energy	-25.62%	-2.92%	-2.69%
Ecolab	12.91%	22.73%	9.08%

Insider and Institutional Ownership

47.2% of DAQO New Energy shares are owned by institutional investors. Comparatively, 74.9% of Ecolab shares are owned by institutional investors. 24.3% of DAQO New Energy shares are owned by insiders. Comparatively, 0.0% of Ecolab shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Ecolab beats DAQO New Energy on 13 of the 14 factors compared between the two stocks.

About DAQO New Energy

Daqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufacturers in the People's Republic of China. Its products are used in ingots, wafers, cells, and modules for solar power solutions. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is based in Shanghai, the People's Republic of China.

About Ecolab

Ecolab Inc. provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through three segments: Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences. The Global Industrial segment offers water treatment and process applications, and cleaning and sanitizing solutions to manufacturing, food and beverage processing, transportation, chemical, metals and mining, power generation, pulp and paper, commercial laundry, petroleum, refining, and petrochemical industries. Its Global Institutional & Specialty segment provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government and education, and retail industries. The Global Healthcare & Life Sciences segment offers specialized cleaning and sanitizing products to the healthcare, personal care, and pharmaceutical industries, such as infection prevention and surgical solutions, and end-to-end cleaning and contamination control solutions under the Ecolab, Microtek, and Anios brand names. In addition, the company provides pest elimination services to detect, eliminate, and prevent pests, such as rodents and insects in restaurants, food and beverage processors, hotels, grocery operations, and other commercial segments including education, life sciences, and healthcare customers. Further, it offers colloidal silica for binding and polishing applications in semiconductor, catalyst, and aerospace component manufacturing, as well as chemical industries; and products and services that manage wash process through custom designed programs, premium products, dispensing equipment, water and energy management, and reduction, as well as real time data management. It sells its products through field sales and corporate account personnel, distributors, and dealers. Ecolab Inc. was founded in 1923 and is headquartered in Saint Paul, Minnesota.