Financial Review: ARM (NASDAQ:ARM) and United Microelectronics (NYSE:UMC)

ARM (NASDAQ:ARM) and United Microelectronics (NYSE:UMC) are both large-cap business services companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Analyst Recommendations

This is a summary of current ratings and price targets for ARM and United Microelectronics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	1	10	17	2	2.67
United Microelectronics	0	1	2	0	2.67

ARM currently has a consensus price target of $125.96, indicating a potential downside of 13.48%. United Microelectronics has a consensus price target of $8.90, indicating a potential upside of 1.95%. Given United Microelectronics’ higher possible upside, analysts clearly believe United Microelectronics is more favorable than ARM.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$3.50 billion	43.62	$306.00 million	N/A	N/A
United Microelectronics	$223.46 billion	0.10	$1.95 billion	$0.70	12.47

United Microelectronics has higher revenue and earnings than ARM.

Institutional & Insider Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 5.1% of United Microelectronics shares are held by institutional investors. 8.0% of United Microelectronics shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares ARM and United Microelectronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	12.12%	18.97%	13.23%
United Microelectronics	23.90%	14.80%	9.41%

Summary

ARM beats United Microelectronics on 7 of the 12 factors compared between the two stocks.

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.

About United Microelectronics

United Microelectronics Corporation operates as a semiconductor wafer foundry in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe, and internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It serves fabless design companies and integrated device manufacturers. The company was incorporated in 1980 and is headquartered in Hsinchu City, Taiwan.