Financial Analysis: ARM (ARM) and The Competition

ARM (NASDAQ:ARM) is one of 220 public companies in the “Semiconductors & Semiconductor Equipment” industry, but how does it contrast to its peers? We will compare ARM to similar businesses based on the strength of its earnings, dividends, analyst recommendations, valuation, risk, institutional ownership and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for ARM and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	7	18	0	2.65
ARM Competitors	3512	12384	25831	1004	2.57

ARM currently has a consensus target price of $296.38, indicating a potential upside of 45.74%. As a group, “Semiconductors & Semiconductor Equipment” companies have a potential upside of 35.89%. Given ARM’s stronger consensus rating and higher probable upside, equities analysts plainly believe ARM is more favorable than its peers.

Institutional and Insider Ownership

7.5% of ARM shares are owned by institutional investors. Comparatively, 54.7% of shares of all “Semiconductors & Semiconductor Equipment” companies are owned by institutional investors. 11.8% of shares of all “Semiconductors & Semiconductor Equipment” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares ARM and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
ARM	$5.46 billion	$904.00 million	233.75
ARM Competitors	$9.85 billion	$2.53 billion	8.76

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

Volatility & Risk

ARM has a beta of 3.93, meaning that its share price is 293% more volatile than the S&P 500. Comparatively, ARM’s peers have a beta of 2.81, meaning that their average share price is 181% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ARM	17.13%	11.57%	8.99%
ARM Competitors	-1,255.44%	-126.13%	-3.87%

Summary

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

ARM Company Profile

Arm Holdings plc designs and licenses semiconductor technology, including processor architectures and related intellectual property. Rather than manufacturing chips, the company licenses its designs and collects royalties on products that use them. Arm’s offerings include Cortex CPUs, Mali graphics processors, Neoverse infrastructure platforms and other technology for applications ranging from smartphones and consumer electronics to automotive systems, the Internet of Things and cloud computing.