Analyzing Cabot Microelectronics (CCMP) and Applied Optoelectronics (NASDAQ:AAOI)

Cabot Microelectronics (NASDAQ:CCMP) and Applied Optoelectronics (NASDAQ:AAOI) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Risk and Volatility

Cabot Microelectronics has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Applied Optoelectronics has a beta of 1.96, indicating that its stock price is 96% more volatile than the S&P 500.

Institutional & Insider Ownership

98.6% of Cabot Microelectronics shares are owned by institutional investors. Comparatively, 59.2% of Applied Optoelectronics shares are owned by institutional investors. 2.2% of Cabot Microelectronics shares are owned by insiders. Comparatively, 6.9% of Applied Optoelectronics shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Cabot Microelectronics pays an annual dividend of $1.68 per share and has a dividend yield of 1.6%. Applied Optoelectronics does not pay a dividend. Cabot Microelectronics pays out 32.2% of its earnings in the form of a dividend. Cabot Microelectronics has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Cabot Microelectronics and Applied Optoelectronics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cabot Microelectronics 0 0 2 0 3.00
Applied Optoelectronics 4 5 1 0 1.70

Cabot Microelectronics currently has a consensus target price of $126.50, indicating a potential upside of 18.86%. Applied Optoelectronics has a consensus target price of $20.67, indicating a potential upside of 125.37%. Given Applied Optoelectronics’ higher possible upside, analysts plainly believe Applied Optoelectronics is more favorable than Cabot Microelectronics.

Valuation & Earnings

This table compares Cabot Microelectronics and Applied Optoelectronics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cabot Microelectronics $590.12 million 5.24 $110.04 million $5.22 20.39
Applied Optoelectronics $267.46 million 0.68 -$2.15 million $0.53 17.30

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

Profitability

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

Net Margins Return on Equity Return on Assets
Cabot Microelectronics 15.61% 20.79% 11.08%
Applied Optoelectronics -5.78% -0.36% -0.25%

Summary

Cabot Microelectronics beats Applied Optoelectronics on 13 of the 17 factors compared between the two stocks.

Cabot Microelectronics Company Profile

Cabot Microelectronics Corp. engages in the development, manufacture, and sale of chemical mechanical planarization consumables products. The firm offers chemical mechanical planarization slurries for polishing many of the conducting, insulating and isolating materials used in integrated circuit devices, and for polishing the disk substrates and magnetic heads used in hard disk drives. It also develops, manufactures and sells chemical mechanical planarization polishing pads, which are used in conjunction with slurries in the chemical mechanical planarization process. The company was founded by William P. Noglows in October 1999 and is headquartered in Aurora, IL.

Applied Optoelectronics Company Profile

Applied Optoelectronics, Inc. designs, manufactures, and sells various fiber-optic networking products worldwide. It offers optical modules, lasers, transmitters and transceivers, and turn-key equipment, as well as headend, node, and distribution equipment. The company sells its products to Internet data center operators, cable television and telecommunications equipment manufacturers, and Internet service providers through its direct and indirect sales channels. Applied Optoelectronics, Inc. was founded in 1997 and is headquartered in Sugar Land, Texas.

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