Analyzing Applied Optoelectronics (NASDAQ:AAOI) and SolarEdge Technologies (NASDAQ:SEDG)

SolarEdge Technologies (NASDAQ:SEDG) and Applied Optoelectronics (NASDAQ:AAOI) are both small-cap oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, risk, valuation, earnings, institutional ownership, analyst recommendations and profitability.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for SolarEdge Technologies and Applied Optoelectronics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SolarEdge Technologies	5	25	4	0	1.97
Applied Optoelectronics	0	2	2	0	2.50

SolarEdge Technologies currently has a consensus price target of $40.84, suggesting a potential upside of 119.92%. Applied Optoelectronics has a consensus price target of $13.75, suggesting a potential downside of 27.52%. Given SolarEdge Technologies’ higher probable upside, equities analysts clearly believe SolarEdge Technologies is more favorable than Applied Optoelectronics.

Risk & Volatility

SolarEdge Technologies has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 1.96, indicating that its share price is 96% more volatile than the S&P 500.

Profitability

This table compares SolarEdge Technologies and Applied Optoelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SolarEdge Technologies	-33.86%	-18.00%	-9.59%
Applied Optoelectronics	-34.84%	-19.82%	-10.51%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SolarEdge Technologies	$1.51 billion	0.70	$34.33 million	($4.65)	-3.99
Applied Optoelectronics	$206.94 million	3.57	-$56.05 million	($1.82)	-10.42

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

Institutional & Insider Ownership

95.1% of SolarEdge Technologies shares are held by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are held by institutional investors. 0.7% of SolarEdge Technologies shares are held by company insiders. Comparatively, 5.4% of Applied Optoelectronics shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

SolarEdge Technologies beats Applied Optoelectronics on 9 of the 14 factors compared between the two stocks.

About SolarEdge Technologies

SolarEdge Technologies, Inc., together with its subsidiaries, designs, develops, manufactures, and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations in the United States, Germany, the Netherlands, Italy, rest of Europe, and internationally. It operates in two segments, Solar and Energy Storage. The Solar segment offers power optimizers, inverters, batteries, storage solutions, electric vehicle chargers, smart tracking solutions, and smart energy management software products; Monitoring platform, a cloud-based monitoring platform, which collects power, voltage, current, and system data sent from inverters and power optimizers; and MySolarEdge app, that enables system owners to track their real-time system production and household energy consumption. This segment also provides Designer platform, an web-based tool that helps solar professionals to plan, build, and validate residential and commercial systems; Mapper application for registering the physical layout of new PV sites installed with DC optimized inverter systems; SetApp application that activates and configurate inverters; and grid services. The Energy Storage segment provides lithium-ion cells and containerized battery systems (BESS) solutions for commercial, industrial, and utility markets; modules and racks; purpose-built components and solutions, and hardware and software tools; and pre and post sales engineering support for designing, building, and managing battery and system solutions. The company offers e-mobility products, automated machines, and UPS products; and pre-sales support, ongoing trainings, and technical support and after installation services. It sells its products through solar installers and distributors, electrical equipment wholesalers, and PV module manufacturers, as well as engineering, procurement, and construction firms. SolarEdge Technologies, Inc. was incorporated in 2006 and is headquartered in Herzliya, Israel.

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.