Analysts covering Applied Optoelectronics Inc (NASDAQ:AAOI) are predicting double-digit earnings per share contraction of -23.04% over the following three years. Presently, with an EPS of $4.461, we can expect an upcoming EPS of $3.433. To determine whether this negative growth rate expectation is justified, we should take a look at how the company has been performing in the past. See our latest analysis for AAOI
What can we expect from AAOI in the future?
The bad news for investors of AAOI is that a drop in earnings is on the cards. This is based on 9 analysts who estimate earnings dropping to $3.433 from previous levels of around $4.461. This would be a drop of -23.04%, so it will be an interesting ride for any existing shareholders over the next couple of years. In the same period we should see the revenue jump from $369M to $589M and profits (net income) are predicted to dip from $81M to $62M in the next couple of years. Furthermore, margins look rather unappealing at the current levels of revenue and earnings.
Is this similar growth to the past?
The past can be a great indicator for future performance for a stock. We can determine whether this level of expected growth is relatively reasonable or whether the negative outlook is too harsh. AAOI is expected to face a substantial shift from a previous double-digit growth of 429.22%, over the last five years, to a forecast double-digit decline by analysts. This is highly pessimistic and may be a sign of an investment period for AAOI, incurring higher expense growth than revenue.
For AAOI, I’ve put together three pertinent factors you should further research:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is AAOI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AAOI is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AAOI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.