MeritValue

APPLIED OPTOELECTRONICS, INC.

AAOIdata completeness 100%15 fiscal years on file
The thesis, from the filings

APPLIED OPTOELECTRONICS, INC. earns about -24% on invested capital, but has diluted owners by 124% over 5 years — worth asking whether the growth reaches owners. The cash-flow models don't apply cleanly here — the ledger says why below.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$211.6M1$222.8M2$217.6M3$249.4M3$455.7M3
Net income−$54.2M4−$66.4M5−$56M6−$186.7M6−$38.2M6
Operating cash flow−$11.6M7−$14M8−$7.93M9−$69.5M9−$174.4M9
Capital expenditure$7.98M10$3.21M11$9.08M12$43.4M12$179.1M12
Free cash flow (derived)−$19.6M7−$17.2M8−$17M9−$112.9M9−$353.6M9
Total debt$109.4M13$114.1M14$46.4M15$53.4M16$68M16
Cash & equivalents$34.7M17$24.7M18$45.4M19$67.4M20$206.1M20
Diluted shares26.9M27.8M31.9M41.5M60.2M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$121.95
your share of equity
Profit it earned you last year
−$6.35
Free cash flow it threw off
−$58.75
Debt you’d be carrying
$11.29

10 shares is a claim on $121.95 of net worth that earned you −$6.35 and generated −$58.75 of cash last year, against $11.29 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
-24% avg · 5y
FY21 -12%FY22 -17%FY23 -17%FY24 -69%FY25 -6%

It earned an average -24% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
+124% shares · 5y

Share count is up 124% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has fallen 38% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
DCF · Growth Exit 5Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001437749-24-005367 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001437749-25-005575 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001437749-26-005875 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001437749-24-005367 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001437749-25-005575 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001437749-26-005875 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001437749-24-005367 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001437749-25-005575 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001437749-26-005875 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001437749-24-005367 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001437749-25-005575 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001437749-26-005875 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001437749-23-004648 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-12-31 · accession 0001437749-24-005367 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-12-31 · accession 0001437749-25-005575 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-12-31 · accession 0001437749-26-005875 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-12-31 · accession 0001437749-23-004648 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0001437749-24-005367 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0001437749-25-005575 (CashAndCashEquivalentsAtCarryingValue)
  20. 10-K · period ending 2024-12-31 · accession 0001437749-26-005875 (CashAndCashEquivalentsAtCarryingValue)