Comparing Applied Optoelectronics (NASDAQ:AAOI) & Sono-Tek (NASDAQ:SOTK)

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

Insider & Institutional Ownership

47.9% of Sono-Tek shares are held by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are held by institutional investors. 5.5% of Sono-Tek 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, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Sono-Tek has a beta of -0.12, meaning that its stock price is 112% less volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.72, meaning that its stock price is 172% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Sono-Tek and Applied Optoelectronics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sono-Tek	0	2	0	0	2.00
Applied Optoelectronics	0	3	4	0	2.57

Sono-Tek currently has a consensus price target of $7.50, indicating a potential upside of 129.36%. Applied Optoelectronics has a consensus price target of $26.00, indicating a potential upside of 17.17%. Given Sono-Tek’s higher possible upside, analysts clearly believe Sono-Tek is more favorable than Applied Optoelectronics.

Profitability

This table compares Sono-Tek and Applied Optoelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sono-Tek	6.93%	8.10%	6.07%
Applied Optoelectronics	-55.98%	-15.40%	-7.40%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sono-Tek	$20.50 million	2.51	$1.27 million	$0.09	36.33
Applied Optoelectronics	$249.37 million	4.94	-$186.73 million	($3.86)	-5.75

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

Summary

Sono-Tek beats Applied Optoelectronics on 8 of the 14 factors compared between the two stocks.

About Sono-Tek

Sono-Tek Corporation designs and manufactures ultrasonic coating systems for applying on parts and components for the microelectronics/electronics, alternative energy, medical, industrial, and research and development/other markets worldwide. The company also designs and manufactures custom-engineered ultrasonic coating systems; and provides nozzles and generators for manufacturers' equipment. Its products include integrated multi-axis coating systems, integrated coating systems, fluxing systems, OEM systems, and other related systems. In addition, the company provides surface coating solutions and application consulting services. It markets and distributes its products through direct sales personnel, select independent distributors, and sales representatives. The company was incorporated in 1975 and is based in Milton, New York.

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.