Applied Optoelectronics Inc. (NASDAQ:AAOI) Trading Higher On Rise of Data Centers

Applied Optoelectronics Inc. (NASDAQ:AAOI)

Applied Optoelectronics Inc. (NASDAQ:AAOI) impressive run in the market shows no signs of slowing down given the upgrade cycle in the data center market. The company’s core business is poised to receive a major boost as more tech companies continue to upgrade to superfast communications for cloud-based services.

Demand for Fiber-Optic Equipment

The fiber-optic device maker boasts of the likes of Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc. (NASDAQ:FB) and Microsoft Corporation (NASDAQ:MSFT) as its biggest customers. Given that these companies are aggressively ramping up investments in the cloud means the company remains well positioned to register strong growth going forward.

Expectations of increased demand for fiber-optic components from China later in the year also continues to bolster analyst expectations for Applied Optoelectronics Inc. (NASDAQ:AAOI). Last year telecommunications companies in the country aggressively upgraded to 4G networks. However, the market experienced a slowdown early this year with recovery only starting to kick in.

Earnings Beat Impact

Applied Electronic’s first quarter earnings beat estimates which provided a glimpse of what is in store as the race for superfast data centers heats up.

“We continue to believe AAOI remains in prime position to see impressive growth in 2017 as demand for 100 gigabit-per-second optics accelerates. Growth in the data center business was once again driven by their largest customers, Amazon and Facebook (19% of sales). Microsoft has historically been a 10% customer, but was below that threshold this quarter”, “said Piper Jaffray analyst Troy Jensen.

Shares of Applied Optoelectronics Inc. (NASDAQ:AAOI) are currently trading at all-time highs, investor’s sentiments having been bolstered by a stellar showing in the first quarter. For the first three months of the year, the company says its revenue grew by 91% to $96.2 million from $50.4 million as of Q1 2016.

The company reported a net income of $19.8 million in the period, compared to a net loss of (-$1.3) million for the same period last year. Gross margin in the quarter soared to highs of 43.1% from 28.3% as of Q1 2016.

For the second quarter, Applied Optoelectronics Inc. (NASDAQ:AAOI) expects its revenue to be in the range of between $106 million and $112 million in line with the current growth momentum. Net income should be between $22.2 million and $24.3 million representing earnings per share of between $1.09 and $1.19 a share.

Applied Optoelectronics stock was down by 2.93% in Tuesday’s trading session ending the day at $69.15 a share.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Applied Optoelectronics Inc. (NASDAQ:AAOI) Pops on Preliminary Q1 Results

Applied Optoelectronics Inc. (NASDAQ:AAOI)

Sugarland, TX-based Applied Optoelectronics Inc. (NASDAQ:AAOI) released a preliminary, unaudited Q1 2017 financials that soundly beat guidance. AAOI shares closed at $40.82 yesterday and hit a high of $51.30 in Thursday’s pre-market – a 25.6% gain. However, AAOI shares opened Thursday’s regular session at $49.85. Volumes are higher than normal. By 10AM EST over 3.25 million shares of AAOI have traded hands. AAOI has an average daily volume figure of just 1.4 million. AAOI shares had hit resistance in late-March around the $60 level and slid to barely above $40 yesterday before the positive earnings release popped the share price.

Dr. Thompson Lin, Founder, President and CEO of Applied Optoelectronics Inc. (NASDAQ:AAOI), attributed the financial results upside surprise to greater than anticipated demand for the company’s datacenter offerings. Datacenters typically layer servers in rows with racks stacked on top of each other. A switch connects the server and the rack – and rack switches connect to each other and ultimately a network. The physical connectivity for digital transfer has traditionally been done with copper wire but the trend, which Applied Optoelectronics is capturing, is to move to high-capacity optical networking technologies.

Applied Optoelectronics Inc. (NASDAQ:AAOI) is now projecting $96.2 million in revenues for Q1 2017 compared to previous guidance of $87 – $91 million. GAAP/non-GAAP gross margin is forecast between 42.5% and 42.9% – previous guidance was 38%-40%. GAAP net income will come in between $18 and $18.4 million. Non-GAAP net income (after taxes) will be $19.7 – $20.2 million – well above the guidance of $15.5 to $17.2 million. Q1 2017 GAAP EPS (diluted) for Applied Optoelectronics Inc. (NASDAQ:AAOI) will be between $0.91 and $0.94. As with all preliminary, unaudited figures, investors should keep in mind that the figures are subject to change as the company performs its quarterly reviews and financial close.

Applied Optoelectronics Inc. (NASDAQ:AAOI) has had YoY increases in their sales figures since 2012 when they posted a figure of $63.4 million. By 2016 they posted a sales figure of 260.7 million. Their EPS reflects the same trend. In 2013, the company lost -$0.13 EPS but by 2016 they reported an EPS profit of $1.82. Six firms, including Piper Jaffray and Raymond James, follow Applied Optoelectronics Inc. (NASDAQ:AAOI). Five rate AAOI shares as a “Strong Buy” and one analyst rates the shares as a “Hold”. Their consensus price target is $59. YTD AAOI shares are up over 75% but are still well below their 52-week high of $60.19.

4/13/2017
Ticker Symbol AAOI
Last Price a/o 10:02 AM EST  $                    47.67
Average Volume                    140,000
Market Cap (mlns)  $                  790.28
Sales (mlns) $260.70
Shares Outstanding (mlns) 19.36
Share Float (mlns) 17.65
Shortable Yes
Optionable Yes
Inside Ownership 3.90%
Short Float 16.27%
Short Interest Ratio 2.06
Quarterly Return 79.67%
YTD Return 74.15%
Year Return

154.49%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Applied Optoelectronics, Inc. (NASDAQ:AAOI) Completes the Turn

Applied Optoelectronics, Inc. (NASDAQ:AAOI)

Applied Optoelectronics, Inc. (NASDAQ:AAOI) started out as a manufacturer and supplier of products to the cable television market. In 2013 the company took a deliberate turn to transform itself into a producer of products that market to data centers. Any time a company makes a strategic turn there is risk, but it appears that three years later the results are in – and Applied Optoelectronics came out a winner.

In 2014 Applied Optoelectronics, Inc. (NASDAQ:AAOI) reported total revenue growth at 66% over 2013 revenues and attributed that growth to their rapid expansion into the data center optical market. That growth was impressive enough to get the firm the 374th spot in the Deloitte’s 2014 Technology Fast 500. The growth continued in 2015 as Total Revenues grew 46% and GAAP Net Income more than doubled the 2014 figure.

Yesterday Applied Optoelectronics, Inc. (NASDAQ:AAOI) posted their full-year 2016 results. They did not disappoint – again. The Sugarland, TX company reported 2016 revenues up 37% over 2015. GAAP net income increased to $31.2 million, or $1.76 per diluted share, compared with net income of $10.8 million, or $0.65 per diluted share in 2015.

While AAOI shares gained less than 1% during Thursday’s regular session, the market responded to the earnings release by sending AAOI up over 12% in after-market trading to their highest-ever levels ($42.20) on moderate volumes. The growth in the stock has been jaw-dropping for a $600 million company. AAOI threatened to break below $8 in May of 2016 and today is sitting above $40, that is 500% growth in 1.5 years in a highly competitive industry that includes investor darlings such as Lumentum (LITE), Oclaro (OCLR), and ARRIS International (ARRS).

Throughout the transformation, one man remained at the helm. Dr. Thompson Lin is the founder, CEO, and Chairman of the Board of Applied Optoelectronics, Inc. (NASDAQ:AAOI). He founded the firm in 1997 after receiving a Ph.D. in Electrical Engineering from the University of Missouri. Dr. Lin has been awarded over ten patents and has authored over 200 technical papers. While those are impressive achievements, there is little doubt that his greatest achievement has been the skilled stewardship of Applied Optoelectronics, Inc. (NASDAQ:AAOI) through a highly competitive global market.

2/23/2017
Ticker Symbol AAOI
Last Price a/o 7:59 PM EST  $                    41.80
Average Volume                    511,380
Market Cap (mlns)  $                  619.00
Sales (mlns) $228.80
Shares Outstanding (mlns) 16.52
Share Float (mlns) 16.35
Shortable Yes
Optionable Yes
Inside Ownership 2.40%
Short Float 12.75%
Short Interest Ratio 4.08
Quarterly Return 42.96%
YTD Return 59.85%
Year Return 134.65%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20 year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.