Lam Research (NASDAQ:LRCX) & Applied Optoelectronics (NASDAQ:AAOI) Financial Contrast

Lam Research (NASDAQ:LRCX) and Applied Optoelectronics (NASDAQ:AAOI) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Volatility & Risk

Lam Research has a beta of 1.81, meaning that its share price is 81% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 3.76, meaning that its share price is 276% more volatile than the S&P 500.

Profitability

This table compares Lam Research and Applied Optoelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lam Research	30.94%	66.21%	31.61%
Applied Optoelectronics	-8.55%	-4.64%	-2.90%

Earnings & Valuation

This table compares Lam Research and Applied Optoelectronics”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lam Research	$21.68 billion	16.03	$5.36 billion	$5.30	52.45
Applied Optoelectronics	$455.71 million	30.51	-$38.23 million	($0.66)	-262.52

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

Insider and Institutional Ownership

84.6% of Lam Research shares are held by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are held by institutional investors. 0.3% of Lam Research shares are held by insiders. Comparatively, 3.8% of Applied Optoelectronics shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Lam Research and Applied Optoelectronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lam Research	0	7	27	0	2.79
Applied Optoelectronics	1	3	3	0	2.29

Lam Research presently has a consensus target price of $292.97, suggesting a potential upside of 5.40%. Applied Optoelectronics has a consensus target price of $79.80, suggesting a potential downside of 53.94%. Given Lam Research’s stronger consensus rating and higher probable upside, equities analysts plainly believe Lam Research is more favorable than Applied Optoelectronics.

Summary

Lam Research beats Applied Optoelectronics on 11 of the 14 factors compared between the two stocks.

About Lam Research

Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products. It also provides SPEED gapfill high-density plasma chemical vapor deposition products; and Striker single-wafer atomic layer deposition products for dielectric film solutions. In addition, the company offers Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes. Further, it provides Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP series products to address various wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing. The company sells its products and services to semiconductors industry in the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and internationally. The company was incorporated in 1980 and is headquartered in Fremont, California.

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.