Applied Optoelectronics (NASDAQ:AAOI) versus NeoMagic (OTCMKTS:NMGC) Critical Comparison

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

Institutional & Insider Ownership

61.7% of Applied Optoelectronics shares are owned by institutional investors. 12.7% of NeoMagic shares are owned by insiders. Comparatively, 4.5% of Applied Optoelectronics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NeoMagic	N/A	N/A	N/A
Applied Optoelectronics	-42.29%	-10.60%	-5.19%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NeoMagic	N/A	N/A	N/A	N/A	N/A
Applied Optoelectronics	$249.37 million	7.98	-$186.73 million	($3.36)	-9.50

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

Analyst Recommendations

This is a summary of current recommendations for NeoMagic and Applied Optoelectronics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NeoMagic	0	0	0	0	0.00
Applied Optoelectronics	1	2	4	0	2.43

Applied Optoelectronics has a consensus price target of $27.20, indicating a potential downside of 14.79%. Given Applied Optoelectronics’ stronger consensus rating and higher possible upside, analysts plainly believe Applied Optoelectronics is more favorable than NeoMagic.

Volatility & Risk

NeoMagic has a beta of 0.04, suggesting that its share price is 96% less volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.92, suggesting that its share price is 192% more volatile than the S&P 500.

Summary

Applied Optoelectronics beats NeoMagic on 6 of the 10 factors compared between the two stocks.

About NeoMagic

NeoMagic Corporation designs and delivers semiconductors and software solutions for video, television, imaging, graphic, and audio devices. It offers microcontrollers; horizon digital picture frame and digital mobile TV solutions; and SOC processors, such as application processors and Neomobile TV solutions. The company, through its MercadoMagico.com division, operates an e-Commerce platform that allows user to buy and sell products from one another or buy premium electronic products. It sells its applications processors under the MiMagic brand name. The company was founded in 1993 and is based in Milpitas, California.

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.