Critical Contrast: Nlight (NASDAQ:LASR) & Applied Optoelectronics (NASDAQ:AAOI)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Nlight 2.66% 2.28% 1.95%
Applied Optoelectronics -16.22% -6.14% -4.12%

Insider & Institutional Ownership

82.2% of Nlight shares are owned by institutional investors. Comparatively, 64.6% of Applied Optoelectronics shares are owned by institutional investors. 5.8% of Nlight shares are owned by insiders. Comparatively, 6.9% of Applied Optoelectronics shares are owned 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 Nlight and Applied Optoelectronics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nlight 1 5 2 0 2.13
Applied Optoelectronics 2 7 1 0 1.90

Nlight presently has a consensus price target of $18.00, indicating a potential upside of 33.63%. Applied Optoelectronics has a consensus price target of $13.69, indicating a potential upside of 26.15%. Given Nlight’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Nlight is more favorable than Applied Optoelectronics.

Volatility and Risk

Nlight has a beta of 2.17, suggesting that its stock price is 117% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.08, suggesting that its stock price is 108% more volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nlight $191.36 million 2.65 $13.94 million $0.32 42.09
Applied Optoelectronics $267.46 million 0.81 -$2.15 million $0.53 20.47

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

Summary

Nlight beats Applied Optoelectronics on 10 of the 13 factors compared between the two stocks.

Nlight Company Profile

nLIGHT, Inc. designs, develops, and manufactures semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets. The company also produces optical fiber products. It markets and sells its products to original equipment manufacturer primarily through direct sales force in the United States, China, South Korea, Germany, and Finland, as well as through various independent sales representatives and distributors in Asia and Europe. The company was formerly known as nLight Photonics Corporation and changed its name to nLIGHT, Inc. in January 2016. nLIGHT, Inc. was founded in 2000 and is headquartered in Vancouver, Washington.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc. designs, manufactures, and sells various fiber-optic networking products worldwide. It offers optical modules, lasers, transmitters and transceivers, and turn-key equipment, as well as headend, node, and distribution equipment. The company sells its products to Internet data center operators, cable television and telecommunications equipment manufacturers, and Internet service providers through its direct and indirect sales channels. Applied Optoelectronics, Inc. was founded in 1997 and is headquartered in Sugar Land, Texas.

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