SolarEdge Technologies (NASDAQ:SEDG) versus Applied Optoelectronics (NASDAQ:AAOI) Critical Contrast

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Optoelectronics	$206.94 million	3.49	-$56.05 million	($1.82)	-10.20
SolarEdge Technologies	$2.98 billion	0.33	$34.33 million	($8.99)	-1.93

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.

Insider and Institutional Ownership

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

Volatility & Risk

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

Profitability

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

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Applied Optoelectronics and SolarEdge Technologies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Optoelectronics	0	2	2	0	2.50
SolarEdge Technologies	6	21	4	0	1.94

Applied Optoelectronics presently has a consensus target price of $13.75, indicating a potential downside of 25.96%. SolarEdge Technologies has a consensus target price of $35.32, indicating a potential upside of 104.04%. Given SolarEdge Technologies’ higher possible upside, analysts plainly believe SolarEdge Technologies is more favorable than Applied Optoelectronics.

Summary

SolarEdge Technologies beats Applied Optoelectronics on 9 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 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.