Alliance Fiber Optic Products (NASDAQ: AFOP) and Power Integrations (NASDAQ:POWI) are both technology companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Analyst Recommendations

This is a breakdown of recent ratings for Alliance Fiber Optic Products and Power Integrations, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliance Fiber Optic Products 0 0 0 0 N/A
Power Integrations 0 2 3 0 2.60

Power Integrations has a consensus target price of $81.00, indicating a potential upside of 4.99%. Given Power Integrations’ higher possible upside, analysts plainly believe Power Integrations is more favorable than Alliance Fiber Optic Products.

Dividends

Power Integrations pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. Alliance Fiber Optic Products does not pay a dividend. Power Integrations pays out 29.0% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Alliance Fiber Optic Products and Power Integrations’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alliance Fiber Optic Products N/A N/A N/A $0.49 37.78
Power Integrations $387.39 million 5.92 $47.89 million $1.93 39.97

Power Integrations has higher revenue and earnings than Alliance Fiber Optic Products. Alliance Fiber Optic Products is trading at a lower price-to-earnings ratio than Power Integrations, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Alliance Fiber Optic Products has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Power Integrations has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Insider & Institutional Ownership

97.3% of Power Integrations shares are held by institutional investors. 4.3% of Power Integrations shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Alliance Fiber Optic Products and Power Integrations’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliance Fiber Optic Products -4.29% -3.41% -2.68%
Power Integrations 13.69% 11.95% 10.73%

Summary

Power Integrations beats Alliance Fiber Optic Products on 12 of the 13 factors compared between the two stocks.

Alliance Fiber Optic Products Company Profile

Alliance Fiber Optic Products, Inc. (AFOP) designs, manufactures and markets a range of fiber optic components and integrated modules. The Company offers a range of products, including interconnect devices, which are used to connect optical fibers and components; couplers and splitters, which are used to divide and combine optical power, and dense wavelength division multiplexing (DWDM) devices, which are used to separate and combine multiple specific wavelengths. Its connectivity product family provides a line of optical interconnect devices, couplers and splitters, planar lightwave circuits (PLC) and related optical products, as well as integrated modules incorporating these devices. Its optical passive products include wavelength division multiplexing (WDM), coarse wavelength division multiplexer (CWDM) and DWDM components. Its product offerings include connectivity products and optical passive products.

Power Integrations Company Profile

Power Integrations, Inc. designs, develops and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion. The Company’s products are used in power converters that convert electricity from a high-voltage source to the type of power required for downstream use. The Company’s ICs used in alternating current (AC)-direct current (DC) power supply convert high-voltage AC from a wall outlet to the low-voltage DC required by electronic devices. The Company offers a range of products, such as TOPSwitch, TinySwitch, LinkSwitch and Hiper families. The Company also offers CapZero and SenZero families. The Company offers a range of high-voltage gate-driver products sold under the SCALE and SCALE-II product-family names. The DPA-Switch family of products is a monolithic high-voltage DC-DC power conversion IC designed specifically for use in distributed power architectures.

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