Fact based stock research
Applied Optoelectronics (NasdaqGM:AAOI)

US03823U1025

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

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Applied Optoelectronics stock research in summary

ao-inc.com

ANALYSIS: With an Obermatt Combined Rank of 7 (worse than 93% compared with investment alternatives), Applied Optoelectronics (Communications Equipment, USA) shares have lower financial characteristics compared with similar stocks. Shares of Applied Optoelectronics are low in value (priced high) with a consolidated Value Rank of 11 (worse than 89% of alternatives), and are riskily financed (Safety Rank of 12, which means above-average debt burdens) but show above-average growth (Growth Rank of 68). ...read more

RECOMMENDATION: A Combined Rank of 7, is a sell recommendation based on Applied Optoelectronics's financial characteristics. As the company Applied Optoelectronics shows low value with an Obermatt Value Rank of 11 (89% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 68% of comparable companies (Obermatt Growth Rank is 68). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 12 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Applied Optoelectronics, even a low-value company (in terms of its key financial indicators) can be a good investment. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	11
Growth Rank	68
Safety Rank	12
Combined Rank	7

Country	USA
Industry	Communications Equipment
Index	NASDAQ
Size class	Small

19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Applied Optoelectronics

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	55	79	27	11
GROWTH
GROWTH	5	5	99	68
SAFETY
SAFETY	20	51	4	12
SENTIMENT
SENTIMENT	n/a	10	33	^new
360° VIEW
360° VIEW	n/a	9	20	^new

Most recent update of the stock research: 19-Dec-2024. Financial reporting date used for calculating ranks: 30-Sep-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Applied Optoelectronics is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	55	79	27	11
GROWTH
GROWTH	5	5	99	68
SAFETY
SAFETY	20	51	4	12
COMBINED
COMBINED	9	31	33	7

Last update of combined financial performance: 19-Dec-2024. Stock analysis on combined financial performance: The higher the rank of Applied Optoelectronics the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 11 (worse than 89% compared with alternatives), Applied Optoelectronics shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, where the majority of metrics are below, and only one is above average for Applied Optoelectronics. Price-to-Sales (P/S) is 52, which means that the stock price compared with what market professionals expect for future sales is lower than 52% of comparable companies, indicating a good value concerning to Applied Optoelectronics's revenue size. But all other performance indicators point in a different direction. Dividend yields have a Dividend Yield rank of 1, meaning that dividends are expected to be lower than for 99% of comparable investments. Furthermore, Price-to-Book Capital (also referred to as market-to-book ratio) is less favorable than 78% of alternatives (only 22% of peers have an even higher ratio). The same is valid for Price-to-Profit (or Price / Earnings, P/E), which is higher than for 84% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 11, is a sell recommendation based on Applied Optoelectronics's stock price compared with the company's operational size and dividend yields. Since Price-to-Sales is a stable value indicator even in challenging times, investing in Applied Optoelectronics could be seen as a value investment. However, there must be a good reason for the low market-to-book rank. If the company has a typical capital investment practice, the stock may be overvalued because the profit and dividend-related performance indicators are also low. The stock is only good value if investors can expect profits and dividends to pick up in the future. Else, Applied Optoelectronics looks like an expensive investment today. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	89	93	71	52
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	14	35	18	16
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	98	95	40	22
DIVIDEND YIELD
DIVIDEND YIELD	1	1	1	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	55	79	27	11

Last update of Value Rank: 19-Dec-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Applied Optoelectronics; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 68 (better than 68% compared with alternatives), Applied Optoelectronics shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Applied Optoelectronics. Sales Growth has a rank of 100 which means that currently professionals expect the company to grow more than 100% of its competitors. Stock Returns are also above average with a rank of 87. But Capital Growth has only a rank of 29, which means that currently professionals expect the company to grow its invested capital less than 71% of its competitors. Profit Growth is also low, with a rank of only 8, which means that, currently, professionals expect the company to grow its profits below average. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 68, is a buy recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 87% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	13	62	100	100
PROFIT GROWTH
PROFIT GROWTH	100	10	90	8
CAPITAL GROWTH
CAPITAL GROWTH	n/a	15	84	29
STOCK RETURNS
STOCK RETURNS	6	3	100	87
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	5	5	99	68

Last update of Growth Rank: 19-Dec-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Applied Optoelectronics.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 12 (better than 12% compared with alternatives), the company Applied Optoelectronics has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Applied Optoelectronics is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for Applied Optoelectronics. Liquidity is at 20, meaning that the company generates less profit to service its debt than 80% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 30, meaning the company has an above-average debt-to-equity ratio. It has more debt than 70% of its competitors. Finally, Refinancing is at a rank of 17 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 83% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 12 (worse than 88% compared with alternatives), Applied Optoelectronics has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. Investors should look at Obermatt’s Value, Growth, and Sentiment Ranks to confirm a very positive outlook or be careful with investing in stocks of Applied Optoelectronics because it may suffer significantly in case of future difficulties. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	2	26	18	30
REFINANCING
REFINANCING	100	99	1	17
LIQUIDITY
LIQUIDITY	9	22	17	20
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	20	51	4	12

Last update of Safety Rank: 19-Dec-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Applied Optoelectronics and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	13	36	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	50	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	70	65	^new
MARKET PULSE
MARKET PULSE	n/a	8	32	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	10	33	^new

Last update of Sentiment Rank: 19-Dec-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Applied Optoelectronics.
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