Forensic Analysis · Technology / Software · as of Jun 27, 2026
APPLIED OPTOELECTRONICS, INC. (AAOI)
A forensic read on APPLIED OPTOELECTRONICS, INC. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
D · Weak — demands caution
Forensic grade
Grey Zone
Financial health
2.4
Altman Z-score
Watch
Earnings quality
5
Forensic signals
-6.1%
ROE
$10.9B
Market cap
APPLIED OPTOELECTRONICS, INC. earns a D (Weak — demands caution) forensic quality grade, and its Altman Z-score is 2.4, placing it in the Grey zone. 5 forensic signals were flagged in its latest SEC filings, led by accruals ratio.
What the filings flag
+99.6%Accruals ratio.Net operating assets grew +99.6% relative to their average in FY2025 — the accrual component of earnings. Accruals are building sharply — a large slice of profit sits in operating assets, not cash; Richardson/Sloan link high accruals to weaker future returns as they reverse. The cash-flow cross-check agrees: reported earnings ran ahead of operating cash by +36% of net operating assets.
196d DSOReceivables vs revenue.Days sales outstanding moved from 171 to 196 days FY2024→FY2025 (receivables +109% vs revenue +83%). Receivables are outrunning sales — a flag for aggressive revenue recognition or slipping collections.
210dInventory days.Days inventory outstanding moved from 172 to 210 FY2024→FY2025 (against cost of goods sold; inventory +108% vs +70% in cost of sales). Inventory is outrunning what's being sold — a flag for softening demand or obsolescence risk ahead.
-6%Return on invested capital.Return on invested capital is -6% and rising from -15% — well below its ~10% cost of capital, so reinvested dollars may be destroying value, not building it.
+38.7%/yrShare-count dilution.Diluted share count changed +116% over the last 3 years to FY2025 (+38.7%/yr). The count is GROWING — existing holders are being diluted. That's ~38.7% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2022 has been diluted ~116%.
Key fundamentals
Net Margin-8.4%
Debt / Equity0.05x
Free Cash Flow$-353.6M
Latest Revenue$455.7M
Return on Equity-5.2%
Revenue Growth YoY+82.8%
Go deeper — free with an account
The forensic grade and screens above are free — no account needed. An account adds the full interactive deep-dive on APPLIED OPTOELECTRONICS, INC.:
🔒The written investment read — what the numbers mean, in plain English
🔒Ask anything about AAOI's filings — AI Q&A across the 10-K, 10-Qs & 8-Ks
🔒Interactive valuation — reverse-DCF sliders, Monte Carlo & scenario stress
🔒Calibrated 12-month price forecast, with the math shown