Critical Contrast: Applied Optoelectronics (AAOI) & Clearfield (CLFD)

Clearfield (NASDAQ: CLFD) and Applied Optoelectronics (NASDAQ:AAOI) are both small-cap technology companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, risk and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Clearfield 5.20% 5.95% 5.50%
Applied Optoelectronics 21.29% 32.35% 23.92%

Analyst Ratings

This is a summary of recent recommendations for Clearfield and Applied Optoelectronics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Clearfield 0 0 2 0 3.00
Applied Optoelectronics 3 2 4 2 2.45

Clearfield currently has a consensus price target of $15.50, indicating a potential upside of 21.09%. Applied Optoelectronics has a consensus price target of $55.89, indicating a potential upside of 55.51%. Given Applied Optoelectronics’ higher possible upside, analysts clearly believe Applied Optoelectronics is more favorable than Clearfield.

Volatility & Risk

Clearfield has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.88, indicating that its stock price is 188% more volatile than the S&P 500.

Institutional and Insider Ownership

29.0% of Clearfield shares are owned by institutional investors. Comparatively, 76.7% of Applied Optoelectronics shares are owned by institutional investors. 18.3% of Clearfield shares are owned by insiders. Comparatively, 8.2% of Applied Optoelectronics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Clearfield and Applied Optoelectronics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Clearfield $73.95 million 2.39 $3.84 million $0.28 45.71
Applied Optoelectronics $260.71 million 2.67 $31.23 million $4.19 8.58

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

Summary

Applied Optoelectronics beats Clearfield on 12 of the 15 factors compared between the two stocks.

Clearfield Company Profile

Clearfield, Inc. manufactures, markets and sells fiber management and enclosure platform that consolidates, distributes and protects fiber as it moves from the inside plant to the outside plant and all the way to the home, business and cell site. The Company’s products include Clearview Cassette, which is the building block of its product platform; Connectivity and Optical Components; FieldSmart, which is a series of panels, cabinets, wall boxes and other enclosures that house the Clearview components; FieldShield, which is a fiber delivery method for broadband deployment; CraftSmart, which is a line of optical protection field enclosures, and Cable Assemblies. Its products are sold across broadband service providers, including traditional telephone companies, competitive local exchange carriers, multiple service operators (cable television), wireless service providers, and municipal-owned utilities that utilize fiber in their service offerings to businesses and consumers.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc. is a vertically integrated provider of fiber-optic networking products, primarily for networking end markets, such as Internet data center, cable television (CATV), fiber-to-the-home (FTTH) and telecommunications (telecom). The Company designs and manufactures a range of optical communications products at varying levels of integration, from components, subassemblies and modules to turnkey equipment. To Internet-based data center operators, it supplies optical transceivers that plug into switches and servers within the data center and allow these network devices to send and receive data over fiber optic cables. The Company supplies a range of products, including lasers, transmitters and transceivers, and turnkey equipment, to the CATV market. The Company designs, manufactures and integrates its own analog and digital lasers using a combination of Metal Organic Chemical Vapor Deposition (MOCVD) and its Molecular Beam Epitaxy (MBE) fabrication process.

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