Contrasting POET Technologies (OTCMKTS:POETF) and ARM (NASDAQ:ARM)

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

Institutional & Insider Ownership

7.5% of ARM shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
POET Technologies	N/A	-88.82%	-74.05%
ARM	21.82%	11.94%	8.62%

Volatility & Risk

POET Technologies has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, ARM has a beta of 4.57, suggesting that its share price is 357% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for POET Technologies and ARM, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
POET Technologies	0	0	0	0	0.00
ARM	2	5	19	1	2.70

ARM has a consensus target price of $165.23, suggesting a potential upside of 36.44%. Given ARM’s stronger consensus rating and higher probable upside, analysts clearly believe ARM is more favorable than POET Technologies.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
POET Technologies	$4.43 million	324.19	-$18.17 million	($0.05)	-78.70
ARM	$3.69 billion	34.35	$306.00 million	$0.76	159.34

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

Summary

ARM beats POET Technologies on 13 of the 14 factors compared between the two stocks.

About POET Technologies

POET Technologies, Inc. engages in the designing, developing, manufacturing and sale of opto-electronic solutions for the sensing, data communications and telecommunications markets. It developed POET Optical Interposer platform, which allows the integration of electronic and photonic devices into a single multi-chip module. The company was founded on November 14, 1985 and is headquartered in Toronto, Canada.

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.