Applied Optoelectronics (NASDAQ: AAOI) and Vocera Communications (NYSE:VCRA) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Volatility and Risk

Applied Optoelectronics has a beta of 2.92, meaning that its stock price is 192% more volatile than the S&P 500. Comparatively, Vocera Communications has a beta of -0.42, meaning that its stock price is 142% less volatile than the S&P 500.

Valuation & Earnings

This table compares Applied Optoelectronics and Vocera Communications’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $368.63 million 2.13 $98.06 million $4.17 9.77
Vocera Communications $144.51 million 5.68 -$12.09 million ($0.96) -29.40

Applied Optoelectronics has higher revenue and earnings than Vocera Communications. Vocera Communications is trading at a lower price-to-earnings ratio than Applied Optoelectronics, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Applied Optoelectronics and Vocera Communications, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 3 1 4 2 2.50
Vocera Communications 0 0 5 0 3.00

Applied Optoelectronics currently has a consensus target price of $69.63, suggesting a potential upside of 70.90%. Vocera Communications has a consensus target price of $32.20, suggesting a potential upside of 14.10%. Given Applied Optoelectronics’ higher possible upside, equities research analysts clearly believe Applied Optoelectronics is more favorable than Vocera Communications.

Profitability

This table compares Applied Optoelectronics and Vocera Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Optoelectronics 21.92% 31.31% 21.96%
Vocera Communications -17.42% -15.51% -8.76%

Institutional and Insider Ownership

80.7% of Applied Optoelectronics shares are held by institutional investors. 8.2% of Applied Optoelectronics shares are held by company insiders. Comparatively, 6.3% of Vocera Communications shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Applied Optoelectronics beats Vocera Communications on 11 of the 14 factors compared between the two stocks.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc. is a vertically integrated provider of fiber-optic networking products, primarily for networking end markets, such as Internet data center, cable television (CATV), fiber-to-the-home (FTTH) and telecommunications (telecom). The Company designs and manufactures a range of optical communications products at varying levels of integration, from components, subassemblies and modules to turnkey equipment. To Internet-based data center operators, it supplies optical transceivers that plug into switches and servers within the data center and allow these network devices to send and receive data over fiber optic cables. The Company supplies a range of products, including lasers, transmitters and transceivers, and turnkey equipment, to the CATV market. The Company designs, manufactures and integrates its own analog and digital lasers using a combination of Metal Organic Chemical Vapor Deposition (MOCVD) and its Molecular Beam Epitaxy (MBE) fabrication process.

Vocera Communications Company Profile

Vocera Communications, Inc. is a provider of communication solutions for mobile workers in healthcare, hospitality, energy, education and other industries. The Company’s segments include Product and Service. The Company’s solutions include the Vocera Communication System, Vocera Care Experience, Vocera Engage integration platform, smartphone applications and its Experience Innovation Network. The Company’s Vocera Communication System consists of a software platform that connects communication devices, including its hands-free, wearable, voice-controlled communication badges, and third-party mobile devices that use its software applications to become part of the Vocera system. Its Vocera Collaboration Suite combines calling, texting, alerting and content distribution capabilities of Vocera into a smartphone application. Its Vocera Secure Texting is an alternative to non-secure short message service (SMS) texting.

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