Analyzing Applied Optoelectronics (NASDAQ:AAOI) and Valens Semiconductor (NYSE:VLN)

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

Volatility & Risk

Applied Optoelectronics has a beta of 2.64, suggesting that its share price is 164% more volatile than the S&P 500. Comparatively, Valens Semiconductor has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Institutional and Insider Ownership

61.7% of Applied Optoelectronics shares are owned by institutional investors. Comparatively, 33.9% of Valens Semiconductor shares are owned by institutional investors. 4.5% of Applied Optoelectronics shares are owned by insiders. Comparatively, 58.9% of Valens Semiconductor 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Applied Optoelectronics	-38.61%	-22.36%	-12.08%
Valens Semiconductor	-41.94%	-14.05%	-12.51%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Applied Optoelectronics and Valens Semiconductor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Optoelectronics	0	2	3	0	2.60
Valens Semiconductor	0	0	1	1	3.50

Applied Optoelectronics presently has a consensus price target of $24.00, indicating a potential upside of 38.08%. Valens Semiconductor has a consensus price target of $4.00, indicating a potential upside of 94.65%. Given Valens Semiconductor’s stronger consensus rating and higher probable upside, analysts plainly believe Valens Semiconductor is more favorable than Applied Optoelectronics.

Valuation & Earnings

This table compares Applied Optoelectronics and Valens Semiconductor”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	$308.55 million	3.13	-$56.05 million	($3.86)	-4.50
Valens Semiconductor	$63.13 million	3.46	-$19.66 million	($0.33)	-6.23

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

Summary

Valens Semiconductor beats Applied Optoelectronics on 9 of the 15 factors compared between the two stocks.

About Applied Optoelectronics

Applied Optoelectronics, Inc. designs, manufactures, and sells fiber-optic networking products in the United States, Taiwan, and China. It offers optical modules, optical filters, lasers, laser components, subassemblies, transmitters and transceivers, turn-key equipment, headend, node, distribution equipment, and amplifiers. The company sells its products to internet data center operators, cable television, telecom equipment manufacturers, fiber-to-the-home, 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 Valens Semiconductor

Valens Semiconductor Ltd. engages in the provision of semiconductor products for the audio-video and automotive industries. The company offers HDBaseT technology, which enables the simultaneous delivery of ultra-high-definition digital video and audio, Ethernet, USB, control signals, and power through a single long-reach cable. It also provides audio-video solutions for the enterprise, education, industrial, digital signage, industrial, and medical markets. In addition, it offers automotive chipsets that support advanced driver-assistance systems, automotive data solutions, infotainment, telematics, and backbone connectivity. The company’s product series include VS100, VS2000, VS3000, VS6000, VS7000, Valens USB and power extender, Valens VS6320, USB 3.2 Gen1 extension chipset, VA6000, and VA7000. It has a collaboration with iCatch Technology to develop a 360-degree multi-camera videoconferencing solution. The company operates in Israel, China, Hong Kong, the United States, Japan, Germany, Hungary, and internationally. Valens Semiconductor Ltd. is headquartered in Hod Hasharon, Israel.