Applied Optoelectronics (NASDAQ: AAOI) and Finisar Corporation (NASDAQ:FNSR) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.

Earnings and Valuation

This table compares Applied Optoelectronics and Finisar Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $368.63 million 3.39 $98.06 million $4.17 15.51
Finisar Corporation $1.45 billion 1.74 $274.41 million $2.13 10.41

Finisar Corporation has higher revenue and earnings than Applied Optoelectronics. Finisar Corporation 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 and price targets for Applied Optoelectronics and Finisar Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 3 0 6 1 2.50
Finisar Corporation 0 1 10 3 3.14

Applied Optoelectronics presently has a consensus target price of $83.38, suggesting a potential upside of 28.92%. Finisar Corporation has a consensus target price of $32.79, suggesting a potential upside of 47.90%. Given Finisar Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Finisar Corporation is more favorable than Applied Optoelectronics.

Profitability

This table compares Applied Optoelectronics and Finisar Corporation’s 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%
Finisar Corporation 16.92% 13.11% 8.25%

Insider & Institutional Ownership

81.6% of Applied Optoelectronics shares are owned by institutional investors. Comparatively, 86.3% of Finisar Corporation shares are owned by institutional investors. 8.2% of Applied Optoelectronics shares are owned by company insiders. Comparatively, 1.0% of Finisar Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Applied Optoelectronics has a beta of 3.06, indicating that its stock price is 206% more volatile than the S&P 500. Comparatively, Finisar Corporation has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Summary

Applied Optoelectronics beats Finisar Corporation on 8 of the 15 factors compared between the two stocks.

About Applied Optoelectronics

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.

About Finisar Corporation

Finisar Corporation (Finisar) is a provider of optical subsystems and components that are used in data communication and telecommunication applications. The Company’s optical subsystems consist of transmitters, receivers, transceivers, transponders and active optical cables, which provide the fundamental optical-electrical or optoelectronic interface for interconnecting the electronic equipment used in these networks, including the switches, routers, and servers used in wireline networks. These products rely on the use of semiconductor lasers and photodetectors in conjunction with integrated circuits and optoelectronic packaging to provide a means for transmitting and receiving digital signals over fiber optic cable at speeds ranging from less than one gigabit per second (Gbps), to more than 100 Gbps, over distances of less than 10 meters to more than 2,000 kilometers, using a range of network protocols and physical configurations.

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