Critical Comparison: ARM (ARMH) versus Its Peers

ARM (NASDAQ: ARMH) is one of 101 public companies in the “Semiconductors” industry, but how does it contrast to its peers? We will compare ARM to related companies based on the strength of its profitability, dividends, analyst recommendations, valuation, institutional ownership, risk and earnings.

Earnings & Valuation

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

Gross Revenue Net Income Price/Earnings Ratio
ARM N/A N/A 70.59
ARM Competitors $4.38 billion $571.99 million 33.40

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.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ARM 0 0 1 0 3.00
ARM Competitors 1003 4854 8900 382 2.57

As a group, “Semiconductors” companies have a potential upside of 8.46%. Given ARM’s peers higher possible upside, analysts plainly believe ARM has less favorable growth aspects than its peers.

Dividends

ARM pays an annual dividend of $0.34 per share and has a dividend yield of 0.5%. ARM pays out 35.4% of its earnings in the form of a dividend. As a group, “Semiconductors” companies pay a dividend yield of 1.5% and pay out 57.9% of their earnings in the form of a dividend.

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 33.10% 19.72% 16.87%
ARM Competitors -43.22% 1.07% 1.21%

Institutional & Insider Ownership

19.7% of ARM shares are held by institutional investors. Comparatively, 65.1% of shares of all “Semiconductors” companies are held by institutional investors. 3.0% of ARM shares are held by company insiders. Comparatively, 6.7% of shares of all “Semiconductors” companies are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

ARM beats its peers on 7 of the 13 factors compared.

ARM Company Profile

ARM Holdings plc (ARM) is a company engaged in designing a range of inter-related intellectual property (IP), including microprocessors, Physical IP, and supporting software and tools. Its product offering includes 16/32/64-bit reduced instruction set computing (RISC) microprocessors, data engines, graphics processors, digital libraries, embedded memories, peripherals, software and development tools, as well as analog functions and high-speed connectivity products. The Company licenses and sells its technology and products to international electronics companies, which in turn manufacture, market and sell microprocessors, application-specific integrated circuits (ASICs), application-specific standard processors (ASSPs) and microcontrollers (MCUs) based on ARM’s technology to systems companies for incorporation into a range of end products. Its principal geographic markets are Europe, the United States and Asia Pacific.

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