Applied Optoelectronics (AAOI) and Belden (BDC) Critical Review

Applied Optoelectronics (NASDAQ: AAOI) and Belden (NYSE:BDC) are both computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Analyst Ratings

This is a summary of recent recommendations and price targets for Applied Optoelectronics and Belden, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 3 2 4 2 2.45
Belden 0 5 5 0 2.50

Applied Optoelectronics presently has a consensus price target of $55.89, indicating a potential upside of 62.00%. Belden has a consensus price target of $89.14, indicating a potential upside of 3.70%. Given Applied Optoelectronics’ higher possible upside, equities analysts clearly believe Applied Optoelectronics is more favorable than Belden.

Risk & Volatility

Applied Optoelectronics has a beta of 2.88, indicating that its stock price is 188% more volatile than the S&P 500. Comparatively, Belden has a beta of 2.28, indicating that its stock price is 128% more volatile than the S&P 500.

Valuation & Earnings

This table compares Applied Optoelectronics and Belden’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $260.71 million 2.56 $31.23 million $4.15 8.31
Belden $2.36 billion 1.54 $128.00 million $1.45 59.28

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

Dividends

Belden pays an annual dividend of $0.20 per share and has a dividend yield of 0.2%. Applied Optoelectronics does not pay a dividend. Belden pays out 13.8% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Applied Optoelectronics 21.29% 32.35% 23.92%
Belden 4.03% 17.52% 6.76%

Insider and Institutional Ownership

76.6% of Applied Optoelectronics shares are held by institutional investors. 8.2% of Applied Optoelectronics shares are held by insiders. Comparatively, 1.3% of Belden shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Applied Optoelectronics beats Belden on 11 of the 17 factors compared between the two stocks.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc. is a vertically integrated provider of fiber-optic networking products, primarily for networking end markets, such as Internet data center, cable television (CATV), fiber-to-the-home (FTTH) and telecommunications (telecom). The Company designs and manufactures a range of optical communications products at varying levels of integration, from components, subassemblies and modules to turnkey equipment. To Internet-based data center operators, it supplies optical transceivers that plug into switches and servers within the data center and allow these network devices to send and receive data over fiber optic cables. The Company supplies a range of products, including lasers, transmitters and transceivers, and turnkey equipment, to the CATV market. The Company designs, manufactures and integrates its own analog and digital lasers using a combination of Metal Organic Chemical Vapor Deposition (MOCVD) and its Molecular Beam Epitaxy (MBE) fabrication process.

Belden Company Profile

Belden Inc. is a signal transmission solutions provider company. The Company operates through five segment: Broadcast Solutions (Broadcast), Enterprise Connectivity Solutions (Enterprise), Industrial Connectivity Solutions (Industrial Connectivity), Industrial IT Solutions (Industrial IT), and Network Security Solutions (Network Security). The segments design, manufacture, and market a portfolio of signal transmission solutions for applications used in a variety of end markets, including broadcast, enterprise, and industrial. The Company’s portfolio of signal transmission solutions provides transmission of data, sound, and video for various applications. The Company’s sells its products to distributors, end users, installers, and to original equipment manufacturers (OEMs). The Company has manufacturing facilities in the United States, other manufacturing and operating facilities in Brazil, Canada, China, Japan, Mexico, and St. Kitts, as well as in various countries in Europe.

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