📊 AI Stock Rating — Summary

For the quarter ending September 2025, AAOI reported revenue of $118.63 million and a net loss of $17.94 million, resulting in an EPS of -$0.28. The company's net margin is negative, and free cash flow was also negative at -$78.82 million. Despite the challenging financials, the company showed proactivity in managing its balance sheet, which remains stable with total assets of $978.53 million and equity of $559.09 million. Revenue shows a contraction, indicating possible challenges in driving sales. Profitability is impacted by negative EPS reflecting operational inefficiencies and increased costs. Cash flow quality is under pressure with significant negative free cash flow due to high capital expenditures, though the company does not distribute dividends or conduct buybacks. The balance sheet is reasonable with controlled net debt of $98.20 million, providing some financial resilience. No dividends were paid, and stock repurchases were absent, with significant stock issuance occurring. Analysts' price targets range between $25 and $35, suggesting that there might be potential for stock price appreciation despite existing challenges. Shareholder returns might rely heavily on capital appreciation, assuming strategic pivots that could reignite profitability in the future.

AI Score Breakdown

Revenue Growth — Score: 3/10

Revenue showed a contraction. There are no signs of growth momentum, indicating potential challenges in increasing market share or product sales.

Profitability — Score: 2/10

The company reported a negative EPS of -$0.28, reflecting operational inefficiencies and possibly increased operational costs.

Cash Flow Quality — Score: 3/10

Negative free cash flow of -$78.82 million indicates struggles with liquidity management. Absence of dividends and buybacks further underline the cash flow challenges.

Leverage & Balance Sheet — Score: 5/10

The company's net debt is $98.20 million, manageable in the context of a total asset base of $978.53 million, giving it some resilience.

Shareholder Returns — Score: 5/10

With no dividends or buybacks, shareholder returns lean on stock price movements. Analyst targets suggest potential price upside if strategic changes occur.

Analyst Sentiment & Valuation — Score: 6/10

Analyst targets of $25 to $35 indicate some confidence in future price appreciation. Current valuations might seem fair given potential recovery prospects.

⚠ AI-generated — informational only, not financial advice.