NETGEAR (NASDAQ:NTGR – Get Free Report) and Applied Optoelectronics (NASDAQ:AAOI – Get Free Report) are both technology companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.
Analyst Recommendations
This is a breakdown of current ratings and target prices for NETGEAR and Applied Optoelectronics, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NETGEAR | 1 | 1 | 2 | 0 | 2.25 |
| Applied Optoelectronics | 1 | 2 | 3 | 0 | 2.33 |
NETGEAR currently has a consensus target price of $33.50, indicating a potential upside of 48.23%. Applied Optoelectronics has a consensus target price of $147.00, indicating a potential upside of 104.34%. Given Applied Optoelectronics’ stronger consensus rating and higher possible upside, analysts plainly believe Applied Optoelectronics is more favorable than NETGEAR.
Earnings and Valuation
This table compares NETGEAR and Applied Optoelectronics”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NETGEAR | $699.62 million | 0.88 | -$17.92 million | ($0.93) | -24.30 |
| Applied Optoelectronics | $455.71 million | 13.35 | -$38.23 million | ($0.78) | -92.23 |
NETGEAR has higher revenue and earnings than Applied Optoelectronics. Applied Optoelectronics is trading at a lower price-to-earnings ratio than NETGEAR, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
NETGEAR has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 3.85, meaning that its stock price is 285% more volatile than the S&P 500.
Institutional & Insider Ownership
83.0% of NETGEAR shares are held by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are held by institutional investors. 3.1% of NETGEAR shares are held by insiders. Comparatively, 3.8% of Applied Optoelectronics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares NETGEAR and Applied Optoelectronics’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NETGEAR | -3.71% | -2.79% | -1.67% |
| Applied Optoelectronics | -9.57% | -1.98% | -1.34% |
Summary
Applied Optoelectronics beats NETGEAR on 9 of the 13 factors compared between the two stocks.
About NETGEAR
NETGEAR, Inc. provides connectivity solutions the Americas; Europe, the Middle East, Africa; and the Asia Pacific. The company operates in two segments, Connected Home, and NETGEAR for Business. The Connected Home segment offers Wi-Fi routers and home Wi-Fi mesh systems, Wi-Fi hotspots, digital displays, broadband modems, Wi-Fi gateways, Wi-Fi range extenders, powerline adapters, and Wi-Fi network adapters; and provides value-added service offerings, including security and privacy, technical support, and parental controls. The NETGEAR for Business segment provides pro AV Solutions; pro routers; enterprise grade cloud managed or standalone access points; general purpose ethernet switches; NETGEAR Insight remote management software; and NETGEAR engage controller. It markets and sells its products through wholesale distributors, traditional and online retailers, direct market resellers, value-added resellers, and broadband service providers, as well as through its direct online store. The company was incorporated in 1996 and is headquartered in San Jose, California.
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.
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