Analyzing Valens Semiconductor (NYSE:VLN) & Applied Optoelectronics (NASDAQ:AAOI)

Valens Semiconductor (NYSE:VLN) and Applied Optoelectronics (NASDAQ:AAOI) are both small-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Valens Semiconductor	-55.20%	-20.44%	-17.33%
Applied Optoelectronics	-55.98%	-15.40%	-7.40%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valens Semiconductor	$57.86 million	4.05	-$36.58 million	($0.33)	-6.68
Applied Optoelectronics	$308.55 million	4.22	-$186.73 million	($3.86)	-6.08

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

Risk & Volatility

Valens Semiconductor has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 2.64, indicating that its stock price is 164% more volatile than the S&P 500.

Insider and Institutional Ownership

33.9% of Valens Semiconductor shares are owned by institutional investors. Comparatively, 61.7% of Applied Optoelectronics shares are owned by institutional investors. 58.9% of Valens Semiconductor shares are owned by company insiders. Comparatively, 4.5% of Applied Optoelectronics shares are owned 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.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valens Semiconductor	0	0	1	1	3.50
Applied Optoelectronics	0	2	3	0	2.60

Valens Semiconductor presently has a consensus target price of $4.00, suggesting a potential upside of 81.41%. Applied Optoelectronics has a consensus target price of $24.00, suggesting a potential upside of 2.35%. Given Valens Semiconductor’s stronger consensus rating and higher possible upside, analysts plainly believe Valens Semiconductor is more favorable than Applied Optoelectronics.

Summary

Applied Optoelectronics beats Valens Semiconductor on 8 of the 15 factors compared between the two stocks.

About Valens Semiconductor

Valens Semiconductor Ltd. engages in the provision of semiconductor products for the audio-video and automotive industries. The company offers HDBaseT technology, which enables the simultaneous delivery of ultra-high-definition digital video and audio, Ethernet, USB, control signals, and power through a single long-reach cable. It also provides audio-video solutions for the enterprise, education, industrial, digital signage, industrial, and medical markets. In addition, it offers automotive chipsets that support advanced driver-assistance systems, automotive data solutions, infotainment, telematics, and backbone connectivity. The company’s product series include VS100, VS2000, VS3000, VS6000, VS7000, Valens USB and power extender, Valens VS6320, USB 3.2 Gen1 extension chipset, VA6000, and VA7000. It has a collaboration with iCatch Technology to develop a 360-degree multi-camera videoconferencing solution. The company operates in Israel, China, Hong Kong, the United States, Japan, Germany, Hungary, and internationally. Valens Semiconductor Ltd. is headquartered in Hod Hasharon, 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.