Financial Comparison: Sequans Communications (NYSE:SQNS) and Applied Optoelectronics (NASDAQ:AAOI)

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

Earnings & Valuation

This table compares Sequans Communications and Applied Optoelectronics”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sequans Communications	$27.19 million	1.66	-$102.44 million	($12.60)	-0.25
Applied Optoelectronics	$455.71 million	15.29	-$38.23 million	($0.65)	-142.51

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Sequans Communications and Applied Optoelectronics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sequans Communications	1	0	2	1	2.75
Applied Optoelectronics	1	3	3	0	2.29

Sequans Communications currently has a consensus target price of $20.33, indicating a potential upside of 545.71%. Applied Optoelectronics has a consensus target price of $52.80, indicating a potential downside of 43.00%. Given Sequans Communications’ stronger consensus rating and higher probable upside, research analysts plainly believe Sequans Communications is more favorable than Applied Optoelectronics.

Institutional and Insider Ownership

63.3% of Sequans Communications shares are owned by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are owned by institutional investors. 9.4% of Sequans Communications shares are owned by insiders. Comparatively, 4.5% of Applied Optoelectronics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sequans Communications	-401.31%	-42.03%	-21.55%
Applied Optoelectronics	-8.39%	-5.29%	-2.99%

Risk & Volatility

Sequans Communications has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 3.2, indicating that its share price is 220% more volatile than the S&P 500.

Summary

Applied Optoelectronics beats Sequans Communications on 9 of the 15 factors compared between the two stocks.

About Sequans Communications

Sequans Communications S.A. engages in the fabless designing, developing, and supplying of cellular semiconductor solutions for massive and broadband Internet of Things (IoT) markets in Taiwan, Korea, China, rest of Asia, Germany, the United States, and internationally. It offers baseband solutions for use in encoding and decoding data based on 4G and 5G protocols for wireless processing platform for a cellular device; RF transceivers used to transmit and receive wireless transmissions; highly integrated SoC solutions that combine various functions into a single die or package; and LTE modules. The company also provides software, including source code and tools to enable manufacturers to integrate their solutions into their devices; and design support services. The company serves OEMs and ODMs Customers, as well as 4G and 5G wireless carriers. Sequans Communications S.A. was incorporated in 2003 and is based in Paris, France.

About Applied Optoelectronics

Applied Optoelectronics, Inc. designs, manufactures, and sells fiber-optic networking products in the United States, Taiwan, and China. It offers optical modules, optical filters, lasers, laser components, subassemblies, transmitters and transceivers, turn-key equipment, headend, node, distribution equipment, and amplifiers. The company sells its products to internet data center operators, cable television, telecom equipment manufacturers, fiber-to-the-home, and internet service providers through its direct and indirect sales channels. Applied Optoelectronics, Inc. was incorporated in 1997 and is headquartered in Sugar Land, Texas.