Head to Head Analysis: Applied Optoelectronics (AAOI) vs. Inseego (INSG)

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Applied Optoelectronics and Inseego, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 3 2 4 2 2.45
Inseego 0 1 1 0 2.50

Applied Optoelectronics presently has a consensus target price of $55.89, suggesting a potential upside of 55.90%. Inseego has a consensus target price of $1.88, suggesting a potential upside of 9.65%. Given Applied Optoelectronics’ higher possible upside, equities analysts clearly believe Applied Optoelectronics is more favorable than Inseego.

Risk and Volatility

Applied Optoelectronics has a beta of 2.88, suggesting that its stock price is 188% more volatile than the S&P 500. Comparatively, Inseego has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500.

Earnings and Valuation

This table compares Applied Optoelectronics and Inseego’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $260.71 million 2.66 $31.23 million $4.19 8.56
Inseego $243.55 million 0.41 -$60.57 million ($1.22) -1.40

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

Insider and Institutional Ownership

76.7% of Applied Optoelectronics shares are owned by institutional investors. Comparatively, 12.1% of Inseego shares are owned by institutional investors. 8.2% of Applied Optoelectronics shares are owned by company insiders. Comparatively, 4.1% of Inseego shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Applied Optoelectronics 21.29% 32.35% 23.92%
Inseego -30.71% N/A -24.17%

Summary

Applied Optoelectronics beats Inseego on 14 of the 15 factors compared between the two stocks.

About Applied Optoelectronics

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.

About Inseego

Novatel Wireless, Inc. is a provider of intelligent wireless solutions for the mobile communications market. The Company’s range of products includes intelligent mobile hotspots, universal serial bus (USB) modems, embedded modules, integrated asset-management and mobile tracking machine-to-machine (M2M) devices, communications and applications software and cloud services. It operates in the wireless communications industry in two product categories: M2M Products and Solutions, and Mobile Computing Solutions. M2M Products and Solutions includes its M2M embedded modules, integrated M2M communications devices, Ctrack fleet management platform and its service delivery platforms, Crossroads, DMS, the N4A DM and N4A CMS that provide device management and service enablement. Mobile Computing Solutions includes its MiFi brand of intelligent mobile hotspot devices, USB modems and embedded modules that enable Internet access and data transmission and services via cellular wireless networks.

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