ARM HOLDINGS PLC-ADR(NASDAQ:ARM) stock Fundamental Analysis

Fundamental Rating

We assign a fundamental rating of 5 out of 10 to ARM. ARM was compared to 109 industry peers in the Semiconductors & Semiconductor Equipment industry. ARM is in great health and has no worries on liquidiy or solvency at all, but the profibility rating is only average. ARM shows excellent growth, but is valued quite expensive already.

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1. Profitability

1.1 Basic Checks

In the past year ARM was profitable.

In the past year ARM had a positive cash flow from operations.

1.2 Ratios

ARM's Return On Assets of 9.49% is fine compared to the rest of the industry. ARM outperforms 77.06% of its industry peers.

The Return On Equity of ARM (12.56%) is better than 75.23% of its industry peers.

ARM has a Return On Invested Capital of 4.54%. This is in the better half of the industry: ARM outperforms 63.30% of its industry peers.

The Average Return On Invested Capital over the past 3 years for ARM is below the industry average of 11.14%.

		Industry Rank	Sector Rank
ROA	9.49%
ROE	12.56%
ROIC	4.54%

ROA(3y)6.64%

ROA(5y)N/A

ROE(3y)11.4%

ROE(5y)N/A

ROIC(3y)7.14%

ROIC(5y)N/A

1.3 Margins

ARM has a Profit Margin of 21.82%. This is amongst the best in the industry. ARM outperforms 83.49% of its industry peers.

ARM's Profit Margin has declined in the last couple of years.

ARM has a better Operating Margin (11.99%) than 67.89% of its industry peers.

In the last couple of years the Operating Margin of ARM has declined.

ARM has a better Gross Margin (96.37%) than 100.00% of its industry peers.

In the last couple of years the Gross Margin of ARM has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	11.99%
PM (TTM)	21.82%
GM	96.37%

OM growth 3Y-32.83%

OM growth 5YN/A

PM growth 3Y-20.92%

PM growth 5YN/A

GM growth 3Y0.85%

GM growth 5YN/A

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ARM is destroying value.

Compared to 1 year ago, ARM has more shares outstanding

The debt/assets ratio for ARM is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 32.23 indicates that ARM is not in any danger for bankruptcy at the moment.

ARM's Altman-Z score of 32.23 is amongst the best of the industry. ARM outperforms 95.41% of its industry peers.

ARM has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.02
Altman-Z	32.23

ROIC/WACC0.37

WACC12.13%

2.3 Liquidity

A Current Ratio of 4.96 indicates that ARM has no problem at all paying its short term obligations.

ARM has a better Current ratio (4.96) than 75.23% of its industry peers.

ARM has a Quick Ratio of 4.96. This indicates that ARM is financially healthy and has no problem in meeting its short term obligations.

ARM has a Quick ratio of 4.96. This is amongst the best in the industry. ARM outperforms 85.32% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	4.96
Quick Ratio	4.96

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 31.39% over the past year.

ARM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -7.80% yearly.

The Revenue for ARM has decreased by -25.88% in the past year. This is quite bad

ARM shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 16.84% yearly.

EPS 1Y (TTM)31.39%

EPS 3Y-7.8%

EPS 5YN/A

EPS Q2Q%34.48%

Revenue 1Y (TTM)-25.88%

Revenue growth 3Y16.84%

Revenue growth 5YN/A

Sales Q2Q%19.3%

3.2 Future

ARM is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 23.50% yearly.

ARM is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 21.21% yearly.

EPS Next Y34.77%

EPS Next 2Y30.43%

EPS Next 3Y30.09%

EPS Next 5Y23.5%

Revenue Next Year25.5%

Revenue Next 2Y24.38%

Revenue Next 3Y23.55%

Revenue Next 5Y21.21%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 69.47, ARM can be considered very expensive at the moment.

ARM's Price/Earnings is on the same level as the industry average.

When comparing the Price/Earnings ratio of ARM to the average of the S&P500 Index (28.29), we can say ARM is valued expensively.

With a Price/Forward Earnings ratio of 48.97, ARM can be considered very expensive at the moment.

ARM's Price/Forward Earnings is on the same level as the industry average.

The average S&P500 Price/Forward Earnings ratio is at 21.08. ARM is valued rather expensively when compared to this.

		Industry Rank	Sector Rank
PE	69.47
Fwd PE	48.97

4.2 Price Multiples

ARM's Enterprise Value to EBITDA is on the same level as the industry average.

ARM's Price/Free Cash Flow is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	169.12
EV/EBITDA	166.78

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.

A more expensive valuation may be justified as ARM's earnings are expected to grow with 30.09% in the coming years.

PEG (NY)2

PEG (5Y)N/A

EPS Next 2Y30.43%

EPS Next 3Y30.09%

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5. Dividend

5.1 Amount

ARM does not give a dividend.

		Industry Rank	Sector Rank
Dividend Yield	N/A

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ARM HOLDINGS PLC-ADR

NASDAQ:ARM (4/17/2025, 8:02:26 PM)

After market: 100.99 +0.26 (+0.26%)

100.73

-0.27 (-0.27%)

Chartmill FA Rating

GICS SectorInformation Technology

GICS IndustryGroupSemiconductors & Semiconductor Equipment

GICS IndustrySemiconductors & Semiconductor Equipment

Earnings (Last)02-05 2025-02-05/amc

Earnings (Next)05-07 2025-05-07/amc

Inst Owners6.69%

Inst Owner Change-0.7%

Ins OwnersN/A

Ins Owner ChangeN/A

Market Cap105.87B

Analysts73.17

Price Target164.23 (63.04%)

Short Float %11.36%

Short Ratio2.37

Dividend

		Industry Rank	Sector Rank
Dividend Yield	N/A

Yearly DividendN/A

Dividend Growth(5Y)N/A

DPN/A

Div Incr Years0

Div Non Decr Years0

Ex-DateN/A

Surprises & Revisions

EPS beat(2)2

Avg EPS beat(2)14.77%

Min EPS beat(2)13.54%

Max EPS beat(2)16.01%

EPS beat(4)4

Avg EPS beat(4)15.35%

Min EPS beat(4)13.54%

Max EPS beat(4)16.95%

EPS beat(8)N/A

Avg EPS beat(8)N/A

EPS beat(12)N/A

Avg EPS beat(12)N/A

EPS beat(16)N/A

Avg EPS beat(16)N/A

Revenue beat(2)2

Avg Revenue beat(2)3.09%

Min Revenue beat(2)2.8%

Max Revenue beat(2)3.37%

Revenue beat(4)4

Avg Revenue beat(4)3.5%

Min Revenue beat(4)2.8%

Max Revenue beat(4)4.94%

Revenue beat(8)N/A

Avg Revenue beat(8)N/A

Revenue beat(12)N/A

Avg Revenue beat(12)N/A

Revenue beat(16)N/A

Avg Revenue beat(16)N/A

PT rev (1m)-0.53%

PT rev (3m)9.14%

EPS NQ rev (1m)0%

EPS NQ rev (3m)0.67%

EPS NY rev (1m)0.19%

EPS NY rev (3m)3.26%

Revenue NQ rev (1m)0%

Revenue NQ rev (3m)0.97%

Revenue NY rev (1m)-0.02%

Revenue NY rev (3m)0.17%

Valuation

		Industry Rank	Sector Rank
PE	69.47
Fwd PE	48.97
P/S	28.66
P/FCF	169.12
P/OCF	131.35
P/B	16.49
P/tB	22.83
EV/EBITDA	166.78

EPS(TTM)1.45

EY1.44%

EPS(NY)2.06

Fwd EY2.04%

FCF(TTM)0.6

FCFY0.59%

OCF(TTM)0.77

OCFY0.76%

SpS3.51

BVpS6.11

TBVpS4.41

PEG (NY)2

PEG (5Y)N/A

Profitability

		Industry Rank	Sector Rank
ROA	9.49%
ROE	12.56%
ROCE	5.81%
ROIC	4.54%
ROICexc	6.99%
ROICexgc	10.91%
OM	11.99%
PM (TTM)	21.82%
GM	96.37%
FCFM	16.95%

ROA(3y)6.64%

ROA(5y)N/A

ROE(3y)11.4%

ROE(5y)N/A

ROIC(3y)7.14%

ROIC(5y)N/A

ROICexc(3y)11.32%

ROICexc(5y)N/A

ROICexgc(3y)24.1%

ROICexgc(5y)N/A

ROCE(3y)9.15%

ROCE(5y)N/A

ROICexcg growth 3YN/A

ROICexcg growth 5YN/A

ROICexc growth 3YN/A

ROICexc growth 5YN/A

OM growth 3Y-32.83%

OM growth 5YN/A

PM growth 3Y-20.92%

PM growth 5YN/A

GM growth 3Y0.85%

GM growth 5YN/A

F-Score6

Asset Turnover0.43

Health

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.02
Debt/EBITDA	0
Cap/Depr	104.65%
Cap/Sales	4.87%
Interest Coverage	250
Cash Conversion	131.06%
Profit Quality	77.67%
Current Ratio	4.96
Quick Ratio	4.96
Altman-Z	32.23

F-Score6

WACC12.13%

ROIC/WACC0.37

Cap/Depr(3y)61.17%

Cap/Depr(5y)N/A

Cap/Sales(3y)3.56%

Cap/Sales(5y)N/A

Profit Quality(3y)167.51%

Profit Quality(5y)N/A

High Growth Momentum

Growth

EPS 1Y (TTM)31.39%

EPS 3Y-7.8%

EPS 5YN/A

EPS Q2Q%34.48%

EPS Next Y34.77%

EPS Next 2Y30.43%

EPS Next 3Y30.09%

EPS Next 5Y23.5%

Revenue 1Y (TTM)-25.88%

Revenue growth 3Y16.84%

Revenue growth 5YN/A

Sales Q2Q%19.3%

Revenue Next Year25.5%

Revenue Next 2Y24.38%

Revenue Next 3Y23.55%

Revenue Next 5Y21.21%

EBIT growth 1Y-42.69%

EBIT growth 3Y-21.51%

EBIT growth 5YN/A

EBIT Next Year50.41%

EBIT Next 3Y36.4%

EBIT Next 5Y33.8%

FCF growth 1Y46.59%

FCF growth 3Y-3.93%

FCF growth 5YN/A

OCF growth 1Y47.5%

OCF growth 3Y-4.03%

OCF growth 5YN/A

ARM HOLDINGS PLC-ADR (ARM) Stock Fundamental Analysis

1. Profitability

1.1 Basic Checks

1.2 Ratios

1.3 Margins

More info and screens

2. Health

2.1 Basic Checks

2.2 Solvency

2.3 Liquidity

More info and screens

3. Growth

3.1 Past

3.2 Future

3.3 Evolution

More info and screens

4. Valuation

4.1 Price/Earnings Ratio

4.2 Price Multiples

4.3 Compensation for Growth

More info and screens

5. Dividend

5.1 Amount

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