Why Alliance Fiber Optic Products (AFOP) Stock Is Gaining This Morning

NEW YORK (TheStreet) -- Shares of Alliance Fiber Optics Products Inc. (AFOP) are higher by 5.71% to $19.62 in early trading on Thursday morning after Sidoti and Co. initiated coverage on the stock with a 'buy' rating and $28 price target.

Alliance Fiber Optics designs, manufactures, and markets a variety of different fiber optic components, and integrated modules for communications equipment manufacturers and service providers.

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Separately, TheStreet Ratings team rates ALLIANCE FIBER OPTIC PRODUCT as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLIANCE FIBER OPTIC PRODUCT (AFOP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AFOP's very impressive revenue growth greatly exceeded the industry average of 2.6%. Since the same quarter one year prior, revenues leaped by 104.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AFOP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.36, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Communications Equipment industry and the overall market, ALLIANCE FIBER OPTIC PRODUCT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 147.61% and other important driving factors, this stock has surged by 79.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AFOP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALLIANCE FIBER OPTIC PRODUCT reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ALLIANCE FIBER OPTIC PRODUCT increased its bottom line by earning $1.01 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.32 versus $1.01).
  • You can view the full analysis from the report here: AFOP Ratings Report
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