Broadcom (NASDAQ:AVGO) & Applied Optoelectronics (NASDAQ:AAOI) Head to Head Contrast

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

Analyst Ratings

This is a breakdown of recent recommendations for Applied Optoelectronics and Broadcom, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Optoelectronics	1	1	3	0	2.40
Broadcom	0	2	24	0	2.92

Applied Optoelectronics currently has a consensus price target of $29.20, suggesting a potential upside of 16.66%. Broadcom has a consensus price target of $225.04, suggesting a potential downside of 4.78%. Given Applied Optoelectronics’ higher probable upside, equities research analysts clearly believe Applied Optoelectronics is more favorable than Broadcom.

Institutional and Insider Ownership

61.7% of Applied Optoelectronics shares are held by institutional investors. Comparatively, 76.4% of Broadcom shares are held by institutional investors. 5.4% of Applied Optoelectronics shares are held by insiders. Comparatively, 2.0% of Broadcom shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Applied Optoelectronics has a beta of 2.36, indicating that its stock price is 136% more volatile than the S&P 500. Comparatively, Broadcom has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Applied Optoelectronics	-38.61%	-22.36%	-12.08%
Broadcom	11.43%	28.00%	11.16%

Valuation and Earnings

This table compares Applied Optoelectronics and Broadcom”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	$217.65 million	5.39	-$56.05 million	($2.06)	-12.15
Broadcom	$51.57 billion	21.48	$5.90 billion	$1.23	192.78

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

Summary

Broadcom beats Applied Optoelectronics on 11 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 Broadcom

Broadcom Inc. designs, develops, and supplies various semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates in two segments, Semiconductor Solutions and Infrastructure Software. It provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; wireless local area network access point SoCs; Ethernet switching and routing custom silicon solutions; serializer/deserializer application specific integrated circuits; optical and copper, and physical layer devices; and fiber optic components and RF semiconductor devices. The company also offers RF front end modules and filter; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers; inductive charging; attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express; fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers. Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. was founded in 1961 and is headquartered in Palo Alto, California.