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

Profitability

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

Net Margins Return on Equity Return on Assets
Applied Optoelectronics -5.78% -0.36% -0.25%
POET Technologies -419.83% -62.83% -55.36%

Insider and Institutional Ownership

59.2% of Applied Optoelectronics shares are owned by institutional investors. 6.9% of Applied Optoelectronics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments 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 POET Technologies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 4 5 1 0 1.70
POET Technologies 0 0 1 0 3.00

Applied Optoelectronics presently has a consensus target price of $20.67, suggesting a potential upside of 106.46%. POET Technologies has a consensus target price of $1.50, suggesting a potential upside of 476.92%. Given POET Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe POET Technologies is more favorable than Applied Optoelectronics.

Earnings and Valuation

This table compares Applied Optoelectronics and POET Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $267.46 million 0.74 -$2.15 million $0.53 18.89
POET Technologies $3.89 million 19.25 -$16.32 million ($0.06) -4.33

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

Volatility and Risk

Applied Optoelectronics has a beta of 1.96, indicating that its share price is 96% more volatile than the S&P 500. Comparatively, POET Technologies has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Summary

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

About Applied Optoelectronics

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.

About POET Technologies

POET Technologies Inc. designs, manufactures, and sells semi-conductor products in the United States, Canada, and Singapore. It offers optical light source products and photonic integrated devices for the sensing, data and tele communications, medical, instrumentation, industrial, defense, and security markets. The company was formerly known as Opel Technologies Inc. and changed its name to POET Technologies Inc. in June 2013. POET Technologies Inc. is headquartered in Toronto, Canada.

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