Comparing Rohm (OTCMKTS:ROHCY) & ARM (NASDAQ:ARM)

Rohm (OTCMKTS:ROHCY) and ARM (NASDAQ:ARM) are both large-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Insider & Institutional Ownership

7.5% of ARM shares are owned by institutional investors. 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rohm	-31.42%	3.39%	2.13%
ARM	18.37%	12.43%	9.48%

Earnings and Valuation

This table compares Rohm and ARM”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rohm	$3.20 billion	3.83	-$1.05 billion	($2.64)	-12.01
ARM	$4.92 billion	73.64	$904.00 million	$0.84	408.25

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

Volatility & Risk

Rohm has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, ARM has a beta of 3.78, meaning that its share price is 278% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Rohm and ARM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rohm	0	1	0	0	2.00
ARM	1	6	20	0	2.70

ARM has a consensus target price of $226.92, indicating a potential downside of 33.83%. Given ARM’s stronger consensus rating and higher possible upside, analysts clearly believe ARM is more favorable than Rohm.

Summary

ARM beats Rohm on 13 of the 13 factors compared between the two stocks.

About Rohm

ROHM Co., Ltd. manufactures and sells electronic components worldwide. The company operates through three segments: LSI, Semiconductor Devices, and Modules. It provides ICs comprising memory, amplifiers and linear, power management, motor/actuator drivers, resistors, clocks and timers, switches and multiplexers, logic, data converters, sensors and MEMS, display drivers, interfaces, wireless LSIs, audio and video products, speech synthesis LSI, and microcontrollers. The company also offers discrete semiconductor products, such as MOSFETs, bipolar transistors, and diodes; power devices, including power transistors and diodes, SiC power devices, IGBT, and IPM; modules, including optical modules, wireless communication modules, wireless charger modules, and print heads; and opto devices comprising LEDs, LED displays, laser diodes, and optical sensors, as well as foundry services, including thin-film piezoelectric MEMS, wafers, and WL-CSP. Its products are used in industry, automotive, consumer electronics, and telecommunications applications. The company was incorporated in 1940 and is headquartered in Kyoto, Japan.

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.