Pixelworks (NASDAQ:PXLW – Get Free Report) and Applied Optoelectronics (NASDAQ:AAOI – Get Free Report) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.
Profitability
This table compares Pixelworks and Applied Optoelectronics’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Pixelworks | -73.07% | -490.11% | -40.74% |
| Applied Optoelectronics | -36.97% | -7.34% | -3.76% |
Institutional and Insider Ownership
21.4% of Pixelworks shares are held by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are held by institutional investors. 5.3% of Pixelworks 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 large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Pixelworks | $33.21 million | 1.10 | -$28.72 million | ($4.72) | -1.24 |
| Applied Optoelectronics | $421.71 million | 7.20 | -$186.73 million | ($3.22) | -13.81 |
Pixelworks has higher earnings, but lower revenue than Applied Optoelectronics. Applied Optoelectronics is trading at a lower price-to-earnings ratio than Pixelworks, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current ratings and price targets for Pixelworks and Applied Optoelectronics, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Pixelworks | 1 | 0 | 3 | 0 | 2.50 |
| Applied Optoelectronics | 2 | 1 | 4 | 0 | 2.29 |
Pixelworks currently has a consensus price target of $15.00, suggesting a potential upside of 157.29%. Applied Optoelectronics has a consensus price target of $35.60, suggesting a potential downside of 19.93%. Given Pixelworks’ stronger consensus rating and higher probable upside, analysts plainly believe Pixelworks is more favorable than Applied Optoelectronics.
Volatility and Risk
Pixelworks has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 3.32, indicating that its stock price is 232% more volatile than the S&P 500.
Summary
Applied Optoelectronics beats Pixelworks on 9 of the 14 factors compared between the two stocks.
About Pixelworks
Pixelworks, Inc., together with its subsidiaries, develops and markets semiconductor and software solutions for mobile, home and enterprise, and cinema markets in the United States, Japan, China, Taiwan, Korea, and Europe. The company offers imageprocessor integrated circuits, such as embedded microprocessors, digital signal processing technology, and software that control the operations and signal processing within high-end display systems; visual processor integrated circuits that works with a mobile application processor; and transcoder integrated circuits which includes software that control the operations and signal processing for converting multiple bitrates, resolutions and codecs to provide bandwidth efficient video transmissions based on industry standard protocols. It also provides software and platform licensing products comprising Pixelworks Pro Software, a software that enables development and customize the look and feel of mobile products by use of various features, such as absolute color accuracy, HDR tone mapping, SDR-to-HDR conversion, and others; and TrueCut Motion Platform, content creation tool which provides the ability to dial in a motion look on a shot-by-shot basis. The company distributes its products to integrators, branded manufacturers, and branded suppliers. Pixelworks, Inc. was founded in 1997 and is based in Portland, Oregon.
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.
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