Financial Comparison: MKS (NASDAQ:MKSI) and ARM (NASDAQ:ARM)

MKS (NASDAQ:MKSI) and ARM (NASDAQ:ARM) are both large-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.

Earnings & Valuation

This table compares MKS and ARM”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MKS	$4.35 billion	3.06	$295.00 million	$6.27	31.35
ARM	$5.16 billion	40.77	$904.00 million	$0.97	202.88

ARM has higher revenue and earnings than MKS. MKS is trading at a lower price-to-earnings ratio than ARM, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

MKS has a beta of 2.03, indicating that its stock price is 103% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.78, indicating that its stock price is 278% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for MKS and ARM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MKS	1	2	12	1	2.81
ARM	1	7	18	1	2.70

MKS currently has a consensus target price of $374.86, suggesting a potential upside of 90.73%. ARM has a consensus target price of $303.32, suggesting a potential upside of 54.13%. Given MKS’s stronger consensus rating and higher probable upside, analysts plainly believe MKS is more favorable than ARM.

Insider and Institutional Ownership

99.8% of MKS shares are held by institutional investors. Comparatively, 7.5% of ARM shares are held by institutional investors. 0.6% of MKS shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares MKS and ARM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MKS	10.15%	24.72%	7.80%
ARM	20.25%	12.24%	9.41%

Summary

ARM beats MKS on 8 of the 14 factors compared between the two stocks.

About MKS

MKS Instruments, Inc. provides foundational technology solutions to semiconductor manufacturing, electronics and packaging, and specialty industrial applications in the United States, Germany, China, South Korea, and internationally. It operates through Vacuum Solutions Division (VSD), Photonics Solutions Division (PSD), and Material Solutions Division (MSD) segments. The VSD segment provides foundational technology solutions, including pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and vacuum technology. The PSD segment offers range of solutions, which include lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, temperature sensing, opto-mechanical components, optical elements, systems for flexible PCB laser processing, and laser-based systems, as well as high density interconnect PCB and package manufacturing. The MSD segment develops, process, and manufactures technologies comprising advanced surface modification, electroless and electrolytic plating, and surface finishing for chemistry, equipment, software, and services markets, as well as high-technology applications. In addition, the company sells its products and services through direct sales, network of independent distributors, and sales representatives, as well as websites, including product catalogs. The company was incorporated in 1961 and is headquartered in Andover, Massachusetts.

About ARM

Arm Holdings Plc engages in the licensing, marketing, research, and development of microprocessors, systems IP, graphics processing units, physical IP and associated systems IP, software, and tools. It operates through the following geographical segments: United Kingdom, United States, and Other Countries. The company was founded on November 12, 1990 and is headquartered in Cambridge, the United Kingdom.