Analyzing ARM (ARM) & Its Competitors

ARM (NASDAQ:ARM) is one of 174 publicly-traded companies in the “Semiconductors & related devices” industry, but how does it weigh in compared to its peers? We will compare ARM to similar businesses based on the strength of its earnings, risk, analyst recommendations, valuation, institutional ownership, profitability and dividends.

Insider and Institutional Ownership

7.5% of ARM shares are owned by institutional investors. Comparatively, 56.8% of shares of all “Semiconductors & related devices” companies are owned by institutional investors. 10.6% of shares of all “Semiconductors & related devices” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

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	18.13%	13.69%	9.70%
ARM Competitors	-369.99%	-392.85%	-8.63%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for ARM and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	17	1	2.65
ARM Competitors	2525	9838	19294	682	2.56

ARM currently has a consensus target price of $147.95, indicating a potential upside of 14.93%. As a group, “Semiconductors & related devices” companies have a potential upside of 592.53%. Given ARM’s peers higher probable upside, analysts clearly believe ARM has less favorable growth aspects than its peers.

Earnings and Valuation

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

	Gross Revenue	Net Income	Price/Earnings Ratio
ARM	$3.23 billion	$306.00 million	214.55
ARM Competitors	$21.45 billion	$805.98 million	16.18

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 5.4, meaning that its share price is 440% more volatile than the S&P 500. Comparatively, ARM’s peers have a beta of 1.72, meaning that their average share price is 72% more volatile than the S&P 500.

Summary

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

About ARM

Arm Holdings plc architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers rely on to develop products. It offers microprocessors, systems intellectual property (IPs), graphics processing units, physical IP and associated systems IPs, software, tools, and other related services. Its products are used in various markets, such as automotive, computing infrastructure, consumer technologies, and Internet of things. The company operates in the United States, the People's Republic of China, Taiwan, South Korea, and internationally. The company was founded in 1990 and is headquartered in Cambridge, the United Kingdom. Arm Holdings plc operates as a subsidiary of Kronos II LLC.