Financial Analysis: ARM (ARM) and The Competition

ARM (NASDAQ:ARM) is one of 174 publicly-traded companies in the “Semiconductors & related devices” industry, but how does it weigh in compared to its rivals? We will compare ARM to similar businesses based on the strength of its profitability, risk, institutional ownership, analyst recommendations, valuation, dividends and earnings.

Valuation & Earnings

This table compares ARM and its rivals top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
ARM	$3.54 billion	$306.00 million	221.77
ARM Competitors	$5.74 billion	$791.56 million	15.92

ARM’s rivals have higher revenue and earnings than ARM. ARM is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Insider & Institutional Ownership

7.5% of ARM shares are owned by institutional investors. Comparatively, 56.8% of shares of all “Semiconductors & related devices” companies are owned by institutional investors. 10.3% of shares of all “Semiconductors & related devices” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

ARM has a beta of 5.4, indicating that its share price is 440% more volatile than the S&P 500. Comparatively, ARM’s rivals have a beta of 1.72, indicating that their average share price is 72% more volatile than the S&P 500.

Profitability

This table compares ARM and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	18.13%	13.69%	9.70%
ARM Competitors	-384.91%	-68.82%	-9.88%

Analyst Ratings

This is a breakdown of current ratings and price targets for ARM and its rivals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	17	1	2.65
ARM Competitors	2530	9845	19308	683	2.56

ARM presently has a consensus price target of $147.95, indicating a potential upside of 11.19%. As a group, “Semiconductors & related devices” companies have a potential upside of 581.66%. Given ARM’s rivals higher probable upside, analysts clearly believe ARM has less favorable growth aspects than its rivals.

Summary

ARM beats its rivals on 8 of the 13 factors compared.

About ARM

Arm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers rely on to develop products. It offers microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. Its products are used in various markets, such as automotive, computing infrastructure, consumer technologies, and Internet of things. The company operates in the United States, the People's Republic of China, Taiwan, South Korea, and internationally. The company was founded in 1990 and is headquartered in Cambridge, the United Kingdom. Arm Holdings plc operates as a subsidiary of Kronos II LLC.