POET Technologies (NASDAQ:POET) versus Applied Optoelectronics (NASDAQ:AAOI) Critical Analysis

POET Technologies (NASDAQ:POET) and Applied Optoelectronics (NASDAQ:AAOI) 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 institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Volatility & Risk

POET Technologies has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 1.96, indicating that its share price is 96% more volatile than the S&P 500.

Institutional & Insider Ownership

2.0% of POET Technologies shares are owned by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are owned by institutional investors. 0.5% of POET Technologies shares are owned by insiders. Comparatively, 5.4% of Applied Optoelectronics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for POET Technologies and Applied Optoelectronics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
POET Technologies	0	0	1	0	3.00
Applied Optoelectronics	0	2	2	0	2.50

POET Technologies currently has a consensus price target of $3.50, suggesting a potential downside of 21.17%. Applied Optoelectronics has a consensus price target of $13.75, suggesting a potential downside of 3.91%. Given Applied Optoelectronics’ higher probable upside, analysts plainly believe Applied Optoelectronics is more favorable than POET Technologies.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
POET Technologies	N/A	-221.25%	-171.60%
Applied Optoelectronics	-34.84%	-19.82%	-10.51%

Valuation and Earnings

This table compares POET Technologies and Applied Optoelectronics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
POET Technologies	$116,261.00	2,365.98	-$20.27 million	($0.49)	-9.06
Applied Optoelectronics	$206.94 million	2.69	-$56.05 million	($1.82)	-7.86

POET Technologies has higher earnings, but lower revenue than Applied Optoelectronics. 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.

Summary

Applied Optoelectronics beats POET Technologies on 9 of the 14 factors compared between the two stocks.

About POET Technologies

POET Technologies Inc. designs, develops, manufactures, and sells discrete and integrated opto-electronic solutions in Canada, the United States, Singapore, and China. It offers integration solutions based on the POET Optical Interposer, a novel platform that allows the seamless integration of electronic and photonic devices into a single multi-chip module using advanced wafer-level semiconductor manufacturing techniques. It also develops photonic integrated components. The company serves the data center, telecommunications, Internet of things and industrial sensing, automotive LIDAR, optical coherence tomography for medical devices, and virtual reality systems markets. The company was formerly known as Opel Technologies Inc. and changed its name to POET Technologies Inc. in June 2013. POET Technologies Inc. was incorporated in 1972 and is headquartered in Toronto, Canada.

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.