Comparing Applied Optoelectronics (NASDAQ:AAOI) and Tokyo Electron (OTC:TOELY)

Tokyo Electron (OTC:TOELY) and Applied Optoelectronics (NASDAQ:AAOI) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Institutional & Insider Ownership

1.3% of Tokyo Electron shares are owned by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are owned by institutional investors. 5.4% of Applied Optoelectronics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Tokyo Electron and Applied Optoelectronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tokyo Electron	0	0	0	1	4.00
Applied Optoelectronics	1	1	3	0	2.40

Applied Optoelectronics has a consensus price target of $29.20, suggesting a potential upside of 7.99%. Given Applied Optoelectronics’ higher possible upside, analysts plainly believe Applied Optoelectronics is more favorable than Tokyo Electron.

Profitability

This table compares Tokyo Electron and Applied Optoelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tokyo Electron	22.63%	28.75%	20.52%
Applied Optoelectronics	-38.61%	-22.36%	-12.08%

Valuation and Earnings

This table compares Tokyo Electron and Applied Optoelectronics”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tokyo Electron	$12.33 billion	6.25	$2.51 billion	$3.75	22.29
Applied Optoelectronics	$217.65 million	5.82	-$56.05 million	($2.06)	-13.13

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

Volatility and Risk

Tokyo Electron has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.36, suggesting that its share price is 136% more volatile than the S&P 500.

Summary

Tokyo Electron beats Applied Optoelectronics on 10 of the 15 factors compared between the two stocks.

About Tokyo Electron

Tokyo Electron Limited, together with its subsidiaries, develops, manufactures, and sells semiconductor and flat panel display (FPD) production equipment in Japan, Europe, North America, Taiwan, China, South Korea, Southeast Asia, and internationally. The company offers coaters/developers, etch systems, surface preparation systems, deposition systems, test systems, wafer bonders/debonders, wafer edge trimming, SiC epitaxial CVD systems, gas cluster ion beam system, and cleaning systems. It also provides plasma etch/ash systems for use in the manufacture of FPDs, as well as inkjet printing systems for manufacturing OLED displays. In addition, the company offers delivery, facility management, and non-life insurance services; sells semiconductor products, board computer products, software, and other electronic components; sells and supports network/storage/middleware related solutions; and develops, manufactures, and sells magnetic annealing systems. Tokyo Electron Limited was incorporated in 1951 and is headquartered in Tokyo, Japan.

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.