Reviewing Applied Optoelectronics (NASDAQ:AAOI) and Tower Semiconductor (NASDAQ:TSEM)

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

Earnings & Valuation

This table compares Tower Semiconductor and Applied Optoelectronics”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tower Semiconductor	$1.44 billion	3.31	$207.86 million	$1.81	23.67
Applied Optoelectronics	$308.55 million	4.72	-$186.73 million	($3.86)	-6.80

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

Insider and Institutional Ownership

70.5% of Tower Semiconductor shares are held by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are held by institutional investors. 1.0% of Tower Semiconductor shares are held by company insiders. Comparatively, 4.5% 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 stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tower Semiconductor	13.86%	7.73%	6.62%
Applied Optoelectronics	-55.98%	-15.40%	-7.40%

Analyst Ratings

This is a breakdown of recent recommendations for Tower Semiconductor and Applied Optoelectronics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tower Semiconductor	0	0	4	0	3.00
Applied Optoelectronics	0	2	3	0	2.60

Tower Semiconductor currently has a consensus target price of $60.00, suggesting a potential upside of 40.06%. Applied Optoelectronics has a consensus target price of $24.00, suggesting a potential downside of 8.50%. Given Tower Semiconductor’s stronger consensus rating and higher possible upside, equities analysts plainly believe Tower Semiconductor is more favorable than Applied Optoelectronics.

Risk & Volatility

Tower Semiconductor has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.64, meaning that its stock price is 164% more volatile than the S&P 500.

Summary

Tower Semiconductor beats Applied Optoelectronics on 11 of the 14 factors compared between the two stocks.

About Tower Semiconductor

Tower Semiconductor Ltd., an independent semiconductor foundry, focus on specialty process technologies to manufacture analog intensive mixed-signal semiconductor devices in Israel, the United States, Japan, Europe, and internationally. It provides various customizable process technologies, including SiGe, BiCMOS, mixed signal/CMOS, RF CMOS, CMOS image sensor, integrated power management, and MEMS. The Company also provides design enablement platform for quick and accurate design cycle, as well as transfer optimization and development process services to integrated device manufacturers and fabless companies. It serves various markets, such as consumer electronics, personal computers, communications, automotive, industrial, aerospace, military, and medical device products. The company was incorporated in 1993 and is headquartered in Migdal Haemek, 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.