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 shift in perception regarding its financial health. The company is currently considered overvalued, particularly given its negative profitability metrics, including a Price to Book Value of 3.06 and an EV to Sales ratio of 3.43, which suggest that investors are paying a premium despite the company's losses. Additionally, the company's ROE stands at -19.67%, further highlighting its struggles in generating returns for shareholders.
In comparison to its peers, Applied Optoelectronics shows significant underperformance, with its EV to EBITDA at -27.99%, while nLIGHT, Inc. has a more favorable EV to EBITDA of -42.12. Furthermore, Impinj, Inc. presents a stark contrast with an attractive P/E ratio of 5840.63, underscoring the risk associated with Applied Optoelectronics. Despite a remarkable 1-year stock return of 118.67% compared to the S&P 500's 17.14%, the overall valuation metrics suggest that the stock remains overvalued in the current market context.