Critical Survey: Applied Optoelectronics (NASDAQ:AAOI) versus O2Micro International (NASDAQ:OIIM)

Applied Optoelectronics (NASDAQ:AAOIGet Rating) and O2Micro International (NASDAQ:OIIMGet Rating) 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 earnings, analyst recommendations, dividends, valuation, institutional ownership, profitability and risk.

Risk & Volatility

Applied Optoelectronics has a beta of 1.74, meaning that its stock price is 74% more volatile than the S&P 500. Comparatively, O2Micro International has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Institutional & Insider Ownership

45.9% of Applied Optoelectronics shares are owned by institutional investors. Comparatively, 38.7% of O2Micro International shares are owned by institutional investors. 4.5% of Applied Optoelectronics shares are owned by insiders. Comparatively, 8.0% of O2Micro International shares are owned by 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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Applied Optoelectronics and O2Micro International, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 1 1 0 0 1.50
O2Micro International 0 0 0 0 N/A

Applied Optoelectronics presently has a consensus price target of $3.90, suggesting a potential upside of 97.47%. Given Applied Optoelectronics’ higher possible upside, equities research analysts plainly believe Applied Optoelectronics is more favorable than O2Micro International.

Profitability

This table compares Applied Optoelectronics and O2Micro International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Optoelectronics -25.50% -12.75% -7.19%
O2Micro International 10.60% 10.85% 9.08%

Earnings and Valuation

This table compares Applied Optoelectronics and O2Micro International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $211.57 million 0.26 -$54.16 million ($2.01) -0.98
O2Micro International $101.10 million 1.13 $12.11 million $0.34 11.53

O2Micro International has lower revenue, but higher earnings than Applied Optoelectronics. Applied Optoelectronics is trading at a lower price-to-earnings ratio than O2Micro International, indicating that it is currently the more affordable of the two stocks.

Summary

O2Micro International beats Applied Optoelectronics on 7 of the 11 factors compared between the two stocks.

About Applied Optoelectronics (Get Rating)

Applied Optoelectronics, Inc. designs, manufactures, and sells various fiber-optic networking products worldwide. It offers optical modules, lasers, subassemblies, 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 telecom equipment manufacturers, 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.

About O2Micro International (Get Rating)

O2Micro International Limited, together with its subsidiaries, designs, develops, and markets integrated circuits and solutions for power management components and systems in China, Singapore, Taiwan, Malaysia, Korea, the Philippines, Japan, the United States, and internationally. The company offers analog and mixed-signal integrated circuits that manages and provides power for LCD and LED lighting; controls and monitors battery charging and discharging in portable electronic devices and vehicles; performs DC/DC and AC/DC conversion; and provides select and switch functionality between power sources. Its products are primarily used in the consumer electronics, computer, industrial, communication, and automotive markets for applications, including LCD and LED monitors, LCD and LED televisions, notebook and tablet computers, low/zero emission vehicles, mobile phones, power tools, energy efficient technology relating to batteries, LED lighting, and portable electronics devices. The company sells its products through direct sales force, independent sales representatives, or distributors to OEMs, ODMs, and module makers. It also licenses its proprietary intellectual property to third parties; and provides design and engineering support services. The company was incorporated in 1995 and is headquartered in George Town, the Cayman Islands.

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