Financial Review: AUO (OTCMKTS:AUOTY) versus Fabrinet (NYSE:FN)

Fabrinet (NYSE:FN) and AUO (OTCMKTS:AUOTY) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Fabrinet and AUO, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fabrinet	0	1	7	1	3.00
AUO	0	0	0	0	0.00

Fabrinet currently has a consensus price target of $541.25, suggesting a potential downside of 11.49%. Given Fabrinet’s stronger consensus rating and higher probable upside, research analysts plainly believe Fabrinet is more favorable than AUO.

Valuation & Earnings

This table compares Fabrinet and AUO”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fabrinet	$3.89 billion	5.63	$332.53 million	$10.44	58.57
AUO	$9.04 billion	0.39	$219.80 million	$0.42	10.95

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

Institutional and Insider Ownership

97.4% of Fabrinet shares are owned by institutional investors. 0.2% of Fabrinet shares are owned by company insiders. Comparatively, 16.0% of AUO shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Fabrinet and AUO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fabrinet	9.69%	18.69%	12.96%
AUO	3.56%	6.36%	2.60%

Risk and Volatility

Fabrinet has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500. Comparatively, AUO has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Summary

Fabrinet beats AUO on 13 of the 15 factors compared between the two stocks.

About Fabrinet

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services in North America, the Asia-Pacific, and Europe. The company offers a range of advanced optical and electro-mechanical capabilities in the manufacturing process, including process design and engineering, supply chain management, manufacturing, printed circuit board assembly, advanced packaging, integration, final assembly, and testing. Its products include switching products, including reconfigurable optical add-drop multiplexers, optical amplifiers, modulators, and other optical components and modules that enable network managers to route voice, video, and data communications traffic through fiber optic cables at various wavelengths, speeds, and over various distances. The company's products also comprise tunable lasers, transceivers, and transponders; and active optical cables, which provide high-speed interconnect capabilities for data centers and computing clusters, as well as Infiniband, Ethernet, fiber channel, and optical backplane connectivity. In addition, it provides solid state, diode-pumped, gas, and fiber lasers used in semiconductor processing, biotechnology and medical device, metrology, and material processing industries; and differential pressure, micro-gyro, fuel, and other sensors used in automobiles, as well as non-contact temperature measurement sensors for the medical industry. Further, the company designs and fabricates application-specific crystals, lenses, prisms, mirrors, laser components, and substrates; and other custom and standard borosilicate, clear fused quartz, and synthetic fused silica glass products. It serves original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, automotive components, medical devices, and sensors. The company was incorporated in 1999 and is based in Grand Cayman, the Cayman Islands.

About AUO

AUO Corporation researches, develops, produces, and sells thin film transistor liquid crystal displays (TFT-LCDs) and other flat panel displays for various applications. It operates through two segments, Display and Energy. The company designs, manufactures, and sells ingots, solar wafers, and solar modules, as well as provides technical engineering and maintenance services for solar system projects. It also sells and leases content management system and related hardware; designs digital signage content and field curation solutions; plans, designs, and develops construction project for environmental protection and related project management; and designs, manufactures, and sells TFT-LCD modules, TV sets and related parts, backlight modules, automotive parts, and precision plastic parts. In addition, the company engages in the development, manufacturing, and sale of medical equipment; services related to site rental and educational activities; research and development, and IP related business; solar power generation; and sale and sales support of TFTLCD panels. Further, it designs, develops, and sells software and hardware for health care industry; provides software and hardware integration system and equipment relating to intelligent manufacturing, as well as software development and related consulting services; and investment services. It operates in the People's Republic of China, Taiwan, the United States, Japan, Singapore, and internationally. The company was formerly known as AU Optronics Corp. and changed its name to AUO Corporation in June 2022. AUO Corporation was founded in 1996 and is headquartered in Hsinchu City, Taiwan.