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Applied Optoelectronics (AAOI) was a market favorite in early 2017. The stock soared as buyers chased after each other to grab a piece of this ultra hot play. Times have changed and this stock is now a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Description
Applied Optoelectronics makes fiber-optic networking products primarily for Internet data center, cable television (CATV), and fiber-to-the-home (FTTH) networking end-markets. Applied Optoelectronics was founded in 1997 and is headquartered in Sugar Land, Texas.
Recent Earnings
THe company reported earnings on Feb 21 after the close and topped the Wall Street consensus of $0.83 by $0.06. Normally, investors love to see something like that, but this beat came with some ugly guidance.
The company is expecting to earn $0.28 to $0.34 next quarter but at the time the Wall Street consensus was calling for $0.69.
Revenues are expected to be between $67M and $71M and that was also well below the $86M consensus estimate at the time.
Estimates Moving Lower
Following earnings and really the guidance, future earnings estimates moved lower and they did so in a big way. Investors that care about the fundamentals tend to shy away from stocks that post lower guidance and see lower earnings estimates.
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