Applied Optoelectronics (NASDAQ:AAOI – Get Free Report) and Pixelworks (NASDAQ:PXLW – Get Free Report) are both computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, dividends and analyst recommendations.
Volatility & Risk
Applied Optoelectronics has a beta of 3.32, indicating that its stock price is 232% more volatile than the S&P 500. Comparatively, Pixelworks has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500.
Valuation and Earnings
This table compares Applied Optoelectronics and Pixelworks”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 | $421.71 million | 7.84 | -$186.73 million | ($3.22) | -15.03 |
| Pixelworks | $43.21 million | 0.86 | -$28.72 million | ($4.72) | -1.26 |
Pixelworks has lower revenue, but higher earnings than Applied Optoelectronics. Applied Optoelectronics is trading at a lower price-to-earnings ratio than Pixelworks, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for Applied Optoelectronics and Pixelworks, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Applied Optoelectronics | 2 | 1 | 4 | 0 | 2.29 |
| Pixelworks | 1 | 0 | 3 | 0 | 2.50 |
Applied Optoelectronics currently has a consensus price target of $35.60, indicating a potential downside of 26.45%. Pixelworks has a consensus price target of $15.00, indicating a potential upside of 152.95%. Given Pixelworks’ stronger consensus rating and higher possible upside, analysts plainly believe Pixelworks is more favorable than Applied Optoelectronics.
Profitability
This table compares Applied Optoelectronics and Pixelworks’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Applied Optoelectronics | -36.97% | -7.34% | -3.76% |
| Pixelworks | -73.07% | -490.11% | -40.74% |
Institutional & Insider Ownership
61.7% of Applied Optoelectronics shares are held by institutional investors. Comparatively, 21.4% of Pixelworks shares are held by institutional investors. 4.5% of Applied Optoelectronics shares are held by company insiders. Comparatively, 5.3% of Pixelworks shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Summary
Applied Optoelectronics beats Pixelworks on 9 of the 14 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 Pixelworks
Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the look and feel of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.
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