Critical Survey: Nokia (NYSE:NOK) vs. Applied Optoelectronics (NASDAQ:AAOI)

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Applied Optoelectronics and Nokia, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Optoelectronics	1	2	3	0	2.33
Nokia	2	3	12	0	2.59

Applied Optoelectronics currently has a consensus price target of $139.40, suggesting a potential upside of 32.10%. Nokia has a consensus price target of $13.83, suggesting a potential upside of 37.60%. Given Nokia’s stronger consensus rating and higher probable upside, analysts clearly believe Nokia is more favorable than Applied Optoelectronics.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Applied Optoelectronics	-9.57%	-1.98%	-1.34%
Nokia	3.49%	9.83%	5.53%

Valuation & Earnings

This table compares Applied Optoelectronics and Nokia”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Optoelectronics	$455.71 million	19.58	-$38.23 million	($0.78)	-135.29
Nokia	$22.50 billion	2.57	$736.54 million	$0.14	71.79

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

Risk & Volatility

Applied Optoelectronics has a beta of 3.79, suggesting that its share price is 279% more volatile than the S&P 500. Comparatively, Nokia has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.

Insider & Institutional Ownership

61.7% of Applied Optoelectronics shares are held by institutional investors. Comparatively, 5.3% of Nokia shares are held by institutional investors. 3.8% of Applied Optoelectronics shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Nokia beats Applied Optoelectronics on 10 of the 14 factors compared between the two stocks.

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.

About Nokia

Nokia Oyj provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments: Network Infrastructure, Mobile Networks, Cloud and Network Services, and Nokia Technologies. The company provides fixed networking solutions, such as fiber and copper-based access infrastructure, in-home Wi-Fi solutions, and cloud and virtualization services; IP networking solutions, including IP access, aggregation, and edge and core routing for residential, mobile, enterprise and cloud applications; optical networks solutions that provides optical transport networks for metro, regional, and long-haul applications, and subsea applications; and submarine networks for undersea cable transmission. It serves its products and services to communications service providers, webscales and hyperscalers, digital industries, and government. The company also offers mobile technology products and services for radio access networks and microwave radio links for transport networks, network management solutions, as well as network planning, optimization, network deployment, and technical support services. In addition, it offers cloud and network services, including core network solutions, such as voice and packet core; business applications, such as security, automation, and monetization; cloud and cognitive services; and enterprise solutions, including private wireless and industrial automation. Further, the company licenses intellectual property, including patents, technologies, and the Nokia brand. Nokia Oyj was founded in 1865 and is headquartered in Espoo, Finland.