Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Applied Optoelectronics Are Soaring Today

By Timothy Green - Apr 13, 2017 at 11:46AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The fiber-optic networking company expects its first quarter to be even stronger than it previously anticipated.

What happened

Shares of fiber-optic network products provider Applied Optoelectronics (AAOI -5.82%) jumped on Thursday after the company released preliminary first-quarter results that exceeded its previous guidance. The company expects revenue, gross margin, and net income to be higher than expected, driven by strong demand for its data center products. At 11:30 a.m. EDT, Applied Optoelectronics stock was up about 12%.

So what

Applied Optoelectronics will report its full first-quarter results on May 4. It now expects revenue of $96.2 million, up from its previous guidance range of $87 million to $91 million. CEO Dr. Thompson Lin pointed to robust demand for the company's data center products, as well as solid execution, for the exceptional results.

Cables going into a server in a data center.

Image source: Getty Images.

GAAP and non-GAAP gross margins are now expected in the range of 42.5% to 42.9%, up from a previous guidance range of 38% to 42%. Combined with the higher revenue, this will produce non-GAAP net income between $19.7 million and $20.2 million. That compares to a guidance range of $15.5 million to $17.2 million.

Applied Optoelectronics expects non-GAAP EPS in the range of $1.00 to $1.02, above its guidance of $0.80 and $0.82. The company reported a non-GAAP net loss of $0.04 during the first quarter of 2016.

Now what

Applied Optoelectronics' profits have soared in the past two quarters on strong revenue growth, and the first quarter will continue that trend. Despite slumping since late March, the stock is up nearly 200% over the past year, driven by these strong results.

AAOI Chart

AAOI data by YCharts.

While investors have been pushing down Applied Optoelectronics stock in recent days on no apparent news, solid first-quarter results were enough to undo some of that decline.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Applied Optoelectronics, Inc. Stock Quote
Applied Optoelectronics, Inc.
$1.86 (-5.82%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.