Applied Optoelectronics (NASDAQ:AAOI – Get Free Report) and Broadcom (NASDAQ:AVGO – Get Free Report) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.
Insider and Institutional Ownership
61.7% of Applied Optoelectronics shares are owned by institutional investors. Comparatively, 76.4% of Broadcom shares are owned by institutional investors. 5.4% of Applied Optoelectronics shares are owned by insiders. Comparatively, 2.0% of Broadcom shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of current ratings for Applied Optoelectronics and Broadcom, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Applied Optoelectronics | 1 | 1 | 3 | 0 | 2.40 |
| Broadcom | 0 | 2 | 24 | 0 | 2.92 |
Profitability
This table compares Applied Optoelectronics and Broadcom’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% |
| Broadcom | 11.43% | 28.00% | 11.16% |
Risk and Volatility
Applied Optoelectronics has a beta of 2.36, indicating that its stock price is 136% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.
Earnings and Valuation
This table compares Applied Optoelectronics and Broadcom”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Applied Optoelectronics | $209.55 million | 5.91 | -$56.05 million | ($2.06) | -12.83 |
| Broadcom | $51.57 billion | 20.77 | $5.90 billion | $1.23 | 186.40 |
Broadcom has higher revenue and earnings than Applied Optoelectronics. Applied Optoelectronics is trading at a lower price-to-earnings ratio than Broadcom, indicating that it is currently the more affordable of the two stocks.
Summary
Broadcom beats Applied Optoelectronics on 11 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 Broadcom
Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.
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