Applied Optoelectronics (NASDAQ: AAOI) and Gilat Satellite Networks (NASDAQ:GILT) are both small-cap computer and technology companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitabiliy, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Profitability

This table compares Applied Optoelectronics and Gilat Satellite Networks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Applied Optoelectronics 21.92% 31.31% 21.96%
Gilat Satellite Networks -0.72% 3.44% 1.93%

Analyst Ratings

This is a summary of current ratings and target prices for Applied Optoelectronics and Gilat Satellite Networks, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 3 0 5 2 2.60
Gilat Satellite Networks 0 0 0 0 N/A

Applied Optoelectronics presently has a consensus price target of $83.13, indicating a potential upside of 16.75%. Given Applied Optoelectronics’ higher probable upside, equities research analysts plainly believe Applied Optoelectronics is more favorable than Gilat Satellite Networks.

Insider & Institutional Ownership

77.4% of Applied Optoelectronics shares are held by institutional investors. Comparatively, 7.9% of Gilat Satellite Networks shares are held by institutional investors. 8.2% of Applied Optoelectronics shares are held by insiders. Comparatively, 1.1% of Gilat Satellite Networks shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Applied Optoelectronics and Gilat Satellite Networks’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $306.52 million 4.41 $64.42 million $4.17 17.07
Gilat Satellite Networks $290.82 million 1.03 $21.11 million ($0.04) -137.50

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

Risk and Volatility

Applied Optoelectronics has a beta of 2.98, suggesting that its stock price is 198% more volatile than the S&P 500. Comparatively, Gilat Satellite Networks has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500.

Summary

Applied Optoelectronics beats Gilat Satellite Networks on 13 of the 14 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 Gilat Satellite Networks

Gilat Satellite Networks Ltd. is a provider of satellite-based broadband communications. The Company operates through three segments: Commercial, Mobility and Services divisions. The Company designs and manufactures satellite ground segment and networking communications equipment, which it sells to its customers either as network components (modems, Block Up converters (BUCs), antennas) or as complete network solutions (which include hubs and related terminals and services) or turnkey projects. The equipment that the Company develops includes commercial Very Small Aperture Terminals (VSAT) systems, defense and homeland security satellite communications systems, solid-state power amplifiers (SSPAs), BUCs, low-profile antennas, on-the-Move/on-the-Pause terminals and modems. The Company’s equipment is used by satellite operators, service providers, telecommunications operators, system integrators, government and defense organizations, large corporations and enterprises.

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