ARM (ARM) vs. Its Peers Critical Analysis

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

Risk and Volatility

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

Insider and Institutional Ownership

7.5% of ARM shares are held by institutional investors. Comparatively, 56.8% of shares of all “Semiconductors & related devices” companies are held by institutional investors. 10.6% of shares of all “Semiconductors & related devices” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Net Income	Price/Earnings Ratio
ARM	$3.23 billion	$306.00 million	225.15
ARM Competitors	$20.59 billion	$805.98 million	16.10

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 recent ratings and recommmendations for ARM and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	17	1	2.65
ARM Competitors	2521	9828	19276	681	2.56

ARM presently has a consensus price target of $147.95, indicating a potential upside of 9.52%. As a group, “Semiconductors & related devices” companies have a potential upside of 720.12%. Given ARM’s peers higher possible upside, analysts clearly believe ARM has less favorable growth aspects than its peers.

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	-155.43%	-43.75%	-7.33%

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.