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

Profitability

This table compares Applied Optoelectronics and Polycom’s 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%
Polycom -3.47% -3.73% -2.23%

Risk & Volatility

Applied Optoelectronics has a beta of 3.06, suggesting that its stock price is 206% more volatile than the S&P 500. Comparatively, Polycom has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500.

Institutional & Insider Ownership

81.6% of Applied Optoelectronics shares are owned by institutional investors. Comparatively, 92.4% of Polycom shares are owned by institutional investors. 8.2% of Applied Optoelectronics shares are owned by company insiders. Comparatively, 0.7% of Polycom shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Applied Optoelectronics and Polycom, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Applied Optoelectronics 3 0 6 1 2.50
Polycom 0 0 0 0 N/A

Applied Optoelectronics currently has a consensus price target of $81.50, suggesting a potential upside of 40.11%. Given Applied Optoelectronics’ higher possible upside, analysts plainly believe Applied Optoelectronics is more favorable than Polycom.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Applied Optoelectronics $368.63 million 3.05 $98.06 million $4.17 13.95
Polycom N/A N/A N/A $0.16 77.94

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

Summary

Applied Optoelectronics beats Polycom on 10 of the 11 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 Polycom

Polycom, Inc. (Polycom) offers solutions for voice, video and content sharing and a line of support and service solutions. The Company operates in Americas; Europe, Middle East and Africa (EMEA), and Asia Pacific (APAC) geographic segments. The Company’s video, voice and content-management and content-sharing solutions include applications for mobile devices, browser-based video collaboration, cloud-delivered services, conference room systems and home/work office solutions and immersive telepresence. It offers various products and solutions, which include UC Group Systems, UC Platform and UC Personal Devices. UC Group Systems includes group video, group voice and immersive telepresence systems. UC Platform includes universal collaboration servers, virtualization management, resource management, recording and streaming, and remote access technologies that constitute the RealPresence Platform. UC Personal Devices includes group video, group voice and immersive telepresence systems.

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