Is Applied Optoelectronics, Inc. overvalued or undervalued?

As of 21 February 2019, the valuation grade for Applied Optoelectronics, Inc. moved from expensive to risky, indicating a significant shift in its perceived value. The company appears to be overvalued based on its financial metrics, particularly given its negative P/E ratio and poor returns on capital. Key ratios include a Price to Book Value of 3.06, an EV to EBIT of -18.21, and an EV to EBITDA of -27.99, all of which suggest that the company is struggling to generate positive earnings.
In comparison to its peers, Applied Optoelectronics, Inc. has a worse EV to EBITDA ratio than Navitas Semiconductor Corp. at -12.47 and nLIGHT, Inc. at -21.40, both of which also fall into the risky category. The company's recent stock performance has been volatile, with a 1-year return of 148.02%, significantly outpacing the S&P 500's 10.26% return, but this does not mitigate the underlying financial challenges reflected in its valuation metrics. Overall, the combination of poor profitability ratios and negative earnings suggests that Applied Optoelectronics, Inc. is overvalued in the current market.