Critical Contrast: Oclaro (OCLR) versus Alpha and Omega Semiconductor (AOSL)

Oclaro (NASDAQ: OCLR) and Alpha and Omega Semiconductor (NASDAQ:AOSL) are both small-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, profitability, risk, institutional ownership and earnings.

Risk & Volatility

Oclaro has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Alpha and Omega Semiconductor has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Profitability

This table compares Oclaro and Alpha and Omega Semiconductor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oclaro 19.60% 17.65% 13.93%
Alpha and Omega Semiconductor 4.24% 4.27% 3.22%

Insider and Institutional Ownership

64.5% of Oclaro shares are held by institutional investors. Comparatively, 69.3% of Alpha and Omega Semiconductor shares are held by institutional investors. 2.0% of Oclaro shares are held by insiders. Comparatively, 21.7% of Alpha and Omega Semiconductor shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Oclaro and Alpha and Omega Semiconductor, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oclaro 0 10 5 0 2.33
Alpha and Omega Semiconductor 1 0 3 0 2.50

Oclaro currently has a consensus target price of $10.59, suggesting a potential upside of 19.25%. Alpha and Omega Semiconductor has a consensus target price of $23.33, suggesting a potential upside of 54.63%. Given Alpha and Omega Semiconductor’s stronger consensus rating and higher probable upside, analysts plainly believe Alpha and Omega Semiconductor is more favorable than Oclaro.

Valuation & Earnings

This table compares Oclaro and Alpha and Omega Semiconductor’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oclaro $600.97 million 2.52 $127.85 million $0.75 11.84
Alpha and Omega Semiconductor $383.34 million 0.94 $13.82 million $0.56 26.95

Oclaro has higher revenue and earnings than Alpha and Omega Semiconductor. Oclaro is trading at a lower price-to-earnings ratio than Alpha and Omega Semiconductor, indicating that it is currently the more affordable of the two stocks.

Summary

Oclaro beats Alpha and Omega Semiconductor on 9 of the 14 factors compared between the two stocks.

Oclaro Company Profile

Oclaro, Inc. designs, manufactures, and markets optical components, modules, and subsystems for the long-haul, metro, and data center markets worldwide. The company's products generate, detect, combine, and separate light signals in optical communications networks. It offers client side transceivers, including pluggable transceivers; line side transceivers; tunable laser transmitters, such as discrete lasers and co-packaged laser modulators; lithium niobate modulators to manipulate the phase or the amplitude of an optical signal; transponder modules for transmitter and receiver functions; and discrete lasers and receivers for metro and long-haul applications. The company markets its products through direct sales force, as well as through sales representatives and resellers. It serves network equipment manufacturers of telecommunications and datacom systems, and hyperscale data center operators. The company was formerly known as Bookham, Inc. and changed its name to Oclaro, Inc. in April 2009. Oclaro, Inc. was founded in 1988 and is headquartered in San Jose, California.

Alpha and Omega Semiconductor Company Profile

Alpha and Omega Semiconductor Limited and its subsidiaries design, develop, and supply various power semiconductors. It offers various power discrete products, including low, medium, and high voltage power metal-oxide-semiconductor field-effect transistors (MOSFETs); and SRFETs, XSFET, electrostatic discharges, protected MOSFETs, and insulated gate bipolar transistors, which are used for routing current and switching voltages in power control circuits. The company also provides power IC products comprising devices that are used for power management and power delivery; and analog power devices that are used for circuit protection and signal switching. Its power discrete products are used in applications, such as smart phone charges, battery packs, notebooks, desktop and servers, data centers, basic stations, graphics card, game boxes, TVs, AC adapters, power supplies, e-bikes, motor control, power tools, e-vehicles, white goods and industrial motor drives, UPS systems, wind turbines, solar inverters, and industrial welding; and power ICs have applications in flat panel displays, TVs, notebooks, ultrabooks, servers, DVD/Blu-Ray players, set-top boxes, and networking equipment, as well as desktop PCs, tablets, smartphones, and portable electronic devices. The company markets its products directly, as well as through distributors and original design manufacturers to original equipment manufacturers. It serves customers in the consumer, computing, communications, and industrial markets primarily in the United States, Hong Kong, China, Taiwan, Korea, Germany, and Japan. Alpha and Omega Semiconductor Limited was incorporated in 2000 and is headquartered in Sunnyvale, California.

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