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Is Applied Optoelectronics (AAOI) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Applied Optoelectronics (AAOI - Free Report) . AAOI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Investors should also note that AAOI holds a PEG ratio of 0.78. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AAOI's industry has an average PEG of 1.04 right now. AAOI's PEG has been as high as 1.64 and as low as 0.51, with a median of 0.83, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AAOI has a P/S ratio of 1.11. This compares to its industry's average P/S of 1.73.

Finally, we should also recognize that AAOI has a P/CF ratio of 7.94. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AAOI's current P/CF looks attractive when compared to its industry's average P/CF of 12.87. AAOI's P/CF has been as high as 16.07 and as low as 5.05, with a median of 9.73, all within the past year.

These are just a handful of the figures considered in Applied Optoelectronics's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AAOI is an impressive value stock right now.




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