Contrasting TranSwitch (OTCMKTS:TXCCQ) and Applied Optoelectronics (NASDAQ:AAOI)

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for TranSwitch and Applied Optoelectronics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TranSwitch	0	0	0	0	0.00
Applied Optoelectronics	0	2	3	0	2.60

Applied Optoelectronics has a consensus price target of $22.00, suggesting a potential upside of 15.12%. Given Applied Optoelectronics’ stronger consensus rating and higher probable upside, analysts plainly believe Applied Optoelectronics is more favorable than TranSwitch.

Valuation & Earnings

This table compares TranSwitch and Applied Optoelectronics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TranSwitch	N/A	N/A	N/A	N/A	N/A
Applied Optoelectronics	$249.37 million	4.25	-$56.05 million	($3.86)	-4.95

TranSwitch has higher earnings, but lower revenue than Applied Optoelectronics.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TranSwitch	N/A	N/A	N/A
Applied Optoelectronics	-38.61%	-22.36%	-12.08%

Insider and Institutional Ownership

61.7% of Applied Optoelectronics shares are held by institutional investors. 6.3% of TranSwitch shares are held by company insiders. Comparatively, 5.0% of Applied Optoelectronics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

TranSwitch has a beta of 14.75, indicating that its share price is 1,375% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.55, indicating that its share price is 155% more volatile than the S&P 500.

About TranSwitch

TranSwitch Corporation, together with its subsidiaries, designs, develops, and supplies integrated circuit and intellectual property solutions that provide functionality for voice, data, and video communications equipment for the customer premises and network infrastructure markets. The company provides integrated multi-core network processor system-on-a-chip (SoC) solutions for fixed, 3G and 4G mobile, VoIP, and multimedia applications. It offers converged network infrastructure products, including infrastructure VoIP processors for wire-line and wireless carrier equipment; access VoIP processors; and EoS/EoPDH mappers and framers for carriers to transport data traffic over SONET, SDH, and PDH networks. The company also offers broadband customer premises equipment, such as connectivity solutions comprising HDMI, DisplayPort, MHL, HDP, Ethernet IP cores, and MHDP transceivers for consumer electronics, home network equipment, and industrial and automotive applications; and multi-service SoCs for customer premises equipment that support telephone voice, fax, and routing functionality over broadband access networks. TranSwitch Corporation sells its products to public network system original equipment manufacturers (OEMs), WAN and LAN equipment OEMs, Internet-oriented OEMs, and communications test and performance measurement equipment OEMs; and government, universities, and private laboratories. The company offers its products directly in North America, Taiwan, China, Japan, Korea, and Europe, as well as through a network of distributors in North America, Asia, and Europe. TranSwitch Corporation was founded in 1988 and is headquartered in Shelton, Connecticut. On November 21, 2013, TranSwitch Corporation filed a voluntary petition for liquidation under Chapter 7 in the U.S. Bankruptcy Court for the District of Connecticut.

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.