Critical Comparison: ARM (NASDAQ:ARM) versus SmartKem (NASDAQ:SMTK)

SmartKem (NASDAQ:SMTK) and ARM (NASDAQ:ARM) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, dividends, risk, profitability, institutional ownership and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
SmartKem	-6,262.36%	-610.88%	-199.55%
ARM	18.81%	15.03%	11.39%

Insider & Institutional Ownership

7.5% of ARM shares are owned by institutional investors. 8.7% of SmartKem shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SmartKem	$80,000.00	112.82	-$10.33 million	($2.27)	-0.65
ARM	$4.41 billion	32.45	$792.00 million	$0.78	173.74

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for SmartKem and ARM, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SmartKem	1	0	0	0	1.00
ARM	0	8	18	1	2.74

ARM has a consensus price target of $179.80, suggesting a potential upside of 32.67%. Given ARM’s stronger consensus rating and higher possible upside, analysts plainly believe ARM is more favorable than SmartKem.

Risk and Volatility

SmartKem has a beta of 4.82, suggesting that its stock price is 382% more volatile than the S&P 500. Comparatively, ARM has a beta of 4.11, suggesting that its stock price is 311% more volatile than the S&P 500.

Summary

ARM beats SmartKem on 12 of the 15 factors compared between the two stocks.

About SmartKem

SmartKem, Inc. develops electronics transistors using its proprietary advanced semiconductor materials. Its technology can be used in a range of applications including next generation MicroLED, LCD and AMOLED displays, as well as advanced computer and AI chip packaging, and a new type of sensor. The company was founded on September 21, 2018 and is headquartered in Blackley, the United Kingdom.

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.