Critical Analysis: ARM (NASDAQ:ARM) vs. indie Semiconductor (NASDAQ:INDI)

ARM (NASDAQ:ARM) and indie Semiconductor (NASDAQ:INDI) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Valuation & Earnings

This table compares ARM and indie Semiconductor”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ARM	$3.54 billion	45.03	$306.00 million	$0.60	253.18
indie Semiconductor	$228.81 million	3.91	-$117.62 million	($0.67)	-6.61

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for ARM and indie Semiconductor, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARM	2	6	18	1	2.67
indie Semiconductor	0	0	6	0	3.00

ARM currently has a consensus target price of $150.32, suggesting a potential downside of 1.05%. indie Semiconductor has a consensus target price of $8.92, suggesting a potential upside of 101.28%. Given indie Semiconductor’s stronger consensus rating and higher possible upside, analysts clearly believe indie Semiconductor is more favorable than ARM.

Insider & Institutional Ownership

7.5% of ARM shares are owned by institutional investors. Comparatively, 67.7% of indie Semiconductor shares are owned by institutional investors. 8.2% of indie Semiconductor shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

ARM has a beta of 4.67, suggesting that its stock price is 367% more volatile than the S&P 500. Comparatively, indie Semiconductor has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.

Profitability

This table compares ARM and indie Semiconductor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ARM	18.13%	13.69%	9.70%
indie Semiconductor	-49.88%	-24.04%	-14.42%

Summary

ARM beats indie Semiconductor on 11 of the 15 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 indie Semiconductor

indie Semiconductor, Inc. provides automotive semiconductors and software solutions for advanced driver assistance systems, autonomous vehicle, in-cabin, connected car, and electrification applications in the United States, South America, rest of North America, Greater China, South Korea, rest of the Asia Pacific, and Europe. It offers ultrasonic sensors for parking assist and systems; radar sensors for audio assistance and reverse information; front cameras for vehicle detection, collision avoidance, and sign reading; and side/inside cameras for blind spot and lane change assist, and driver behavior monitoring. The company also provides LiDAR for distance, speed, and obstacle detection, collision avoidance, and emergency brake system; and long range RADAR for audio assistance, obstacle detection, and ACC stop and go. In addition, it designs and manufactures photonic components on various technology platforms, including fiber Bragg gratings, low-noise lasers, athermal and tunable packaging, photonic integration, and low-noise and high-speed electronics. The company was founded in 2007 and is headquartered in Aliso Viejo, California.